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BRYANT  &  STRATTON'S 

COMMEECIAL  LAW 

FOE 

BUSINESS  MEN, 

INCLTTDINO 

MEECHANTS,  FARMEES,  MECHANICS,  ETC. 

AND 

BOOK  OF  REFERENCE  FOR  THE  LEGAL  PROFESSION, 
ADAPTED  TO  ALL  THE  STATES  OF  THE  UNION. 

TO   BE   USED   A3   A 

TEXT-BOOK  FOR  LAW  SCHOOLS  AXD  COMERCIAL 
■COLLEGES, 


"VriTH  A  LAEQB  VAEIETY  OF  PRACTICAL  F0EM3  MOST  COMMONLY  EEQUIEZD 
IN  BUSINESS  TRANSACTIONS. 


BY 

AMOS  DEAN,  LL.  D., 

PROIESSOR    OF    LAW    IX    TOE    LAW    DEPARTMEST    OF    THE 
UNIVERSITY   OF   ALBAXT. 


NEW  YOEK: 
D.    APPLETON    AND    COMPANY, 

443  &  445  BROADWAY. 

LONDON:    IC   LITTLE  BRITAIN. 

18G6. 


EiTTEEED,  according  to  Act  of  Congress,  in  the  year  1360, 

By  BRYANT  &  STEATTON, 

In  the  Clerk's  Office  of  the  District  Court  of  the  United  States  for  the  Southern  District  of 

N«w  York. 


i» 


H-F' 


PEEFACE. 


The  design  of  tliis  work  is  to  present,  in  a  con* 
densed  foim,  tliose  legal  principles  wMcli  are  of  tlie 
most  common  use  in  the  various  transactions  of 
business.  ^VTiile,  to  tlie  profession,  it  offers  a  means 
of  easy  and  ready  reference ;  to  the  man  of  business 
it  is  presented  as  a  guide,  by  tlie  aid  of  wMch,  lie 
can  avoid  those  hazards  of  litigation  that  often  so 
seriously  incommode  his  progress.  It  is  also  in- 
tended to  supply  an  educational  want,  which  is  be- 
coming more  and  more  imperative,  as  the  modes  and 
relations  of  business  grow  more  complex,  intricate, 
and  extended. 

*  To  render  the  work  generally  useftd  for  the  pur- 
poses designed,  it  is,  with  few  exceptions,  confined  to 
the  Law  Merchant^  and  those  princij^les  of  the  Com- 
mon Laiv,  the  knowledge  of  which  is  indispensable 
to  the  proper  conducting  of  business.  Very  little 
reference  is  made  to  any  peculiar  provisions  of  Stat- 
ute, or  local  law;,  as  that  is  found  to  vary  according 
to  the  policy  of  different  States ;  while  the  Law  Mer- 
chant and  the  Common  La^v  ai-e  equally  applicable  to 
all  except  Louisiana. 

The  experience  of  the  writer  in  teaching,  as  well 


IV  PREFACE. 

as  in  practice,  lias  convinced  him  tliat  the  mere  pre- 
sentation of  legal  principles  in  the  abstract,  is  of 
little  value ;  and  that  the  only  proper  .method  by 
which  they  can  be  acquired,  is  in  connection  with 
the  facts  and  cu'cumstanoes  out  of  which  they  arise, 
through  wjiich  they  are  develoj^ed,  and  to  which 
they  have  a  direct  and  necessary  application.  To 
point  and  apply  a  principle  by  its  case,  serving  both 
as  the  means  of  its  illustration,  and  the  authority 
upon  which  it  rests,  is  equally  necessary,  whether 
the  object  be  to  instruct  a  class,  or  to  furnish  guides 
to  the  public,  or  authority  to  judicial  tribunals.  As 
this  has  been  generally  the  plan  pursued,  it  is  hoped 
it  may  commend  it  to  the  profession  as  a  work  of 
reference,  to  the  scholar  as  the  only  effectual  method 
of  acquiring  a  knowledge  of  the  law,  and  to  the  man 
of  business  as  both  affording  the  means  of  a  clearer 
comj^rehension,  and  of  seeming  to  its  guidance  a 
greater  degree  of  safety. 

The  forms  aj)pended  are  ^^rith.  a  view  both  to 
illustrate,  and  to  serve  the  common  pui'poses  of  busi- 
ness. Forms  are  the  embodiment  of  principles,  and 
also  the  iustinunents  throu2:h  which  the  business 
affairs  of  life  are  transacted.  To  secm^e  both  these 
objects,  a  careful  selection  has  been  made  of  a  few 
deemed  the  best  adapted  to  answer  the  purpose  of 
the  one,  and  meet  the  wants  of  the  other. 

Albany,  Xov.  1,  1S60. 


TABLE  OF  CONTENTS. 


BOOK  I. 

OF   PROPERTY. 


PAGB 

Crr.  I. — General 1 

n. — Special ^ 2 

1.  Shipping 3 

2.  Good  Will 5 

3.  Negotiable  Paper 6 

BOOK  n. 

OF   PERSONS. 

Ch.  I. — Of  the  Sole  Trader 8 

II. — Partnership  and  Partners  as  Commercial  Persons 10 

Part  I. — A  Partnership,  what  and  how  formed 10 

II. — Its   different  kinds,  both  as  to  Partnerships  and 

Partners 12 

III. — The  Plights  and  Liabilities  it  confers  and  imposes 
upon  each  Partner  as  against,  and  in  favor  of,  the 

others 15 

IV. — The  Rights  it  gives  to  the  Partnership,  and  to 

Partners  against  third  persons 19 

V. — The  Rights  it  gives  to  third  persons,  both  against 

the  Partnership  and  the  Partners 21 

VI. — Dissolution.  Its  Causes.   Its  Consequences.    When 

Complete 25 

Ch.  m. — Corporations  as  Commercial  Agents 30 

Part  I. — What  they  are  and  how  created 30 

II. — Their  Powers  and  Liabilities 31 

m.— Their  Dissolution  and  Consequences 38 


Vi  CONTENTS. 

PAGE 

Cii.  IV,— Principal  akd  Agext 40 

Part  I. — Agency  what,  who  may  be  agent,  and  how  created  40 

II. — Different  kinds  of  Agency '. . .  43 

III. — Extent  and  Execution  of  Authority 44 

IV. — Duties,  Liabilities,  and  Rights  of  the  Agent 49 

V. — Liabilities  and  Rights  of  the  Principal 69 

VI. — Dissolution  of  Agency , 65 


BOOK  III. 

RIGHTS. 

First  Division. — Eights  relating  to  the  Person. 

Ch.  I.-^Of  Contract ..^. ,  69 

Part  I. — Contract  in  its  Elements 69 

1st  Element.— Parties 70 

2d  Element.— Their  Ability 70 

3d  Element.— Assent 70 

4th  Element. — Consideration 74 

5th  Element, — Thing  to  be  done  or  omitted SO 

II. — Contract  in  its  Construction. 92 

III.— Contract  in  its  Performancs,  or  the  Defences  that 

may  be  interposed 92 

Ch.  II. — Negotiable  Paper 119 

Part  I. — Its  different  kinds,  their  forms,  and  parties 119 

II. — Its  essential  Requisites 126 

ni. — Its  modes  of  Transfer 128 

IV. — Duties  of  the  Holder  in  Presenting  for  Accept- 
ance, and  the  Acceptance 144 

V. — Duties  of  the  Holder  in  Presenting  for  Payment^ 

and  the  Payment 152 

VI. — Duties  of  the  Holder  in  case  of  refusal  to  accept 

or  to  pay 161 

Vn.— Rights  and  Remedies  of  the  Holder 173 

Ch.  III.— Guaranty  and  Suretyship 177 

Part  I. — Nature,  form,  and  essentials  of  the  Contract 177 

n, — Different  kinds  of  Guaranty  and  manner  in  which 

it  is  effected  by  the  Statute  of  Frauds ISO 

in, — Modes  of  extinguishing  the  contract  of  Guaranty 

or  Suretyship 187 

IV.— Rights  of  the  Creditor  against  the  Surety 193 


CONTENTS.  VU 

PAGB 

V. — Eights  of  the  Surety  against  the  Creditor 194 

VI. — Rights  of  the  Surety  against  the  Principal 197 

VII. — Rights  of  the  Sureties  against  each  other 198 

Second  Biyisios.-^IiiffJits  relating  to  the  Tiling. 

Ch.  I. — Contract  of  Affreightment 203 

Part  I.— The  Charter  Party 204 

II.— The  BiU  of  Lading 209 

III. — Carriage  and  Dehvery  of  Goods 212 

IV. — Power  and  Authority  of  the  Master  in  reference 

to  Maritime  Loans 212 

v.— Duties  of  the  Merchant. 217 

VI. — General  Average 217 

VII.— Salvage 222 

VIII. — Dissolution  of  the  Contract  of  Affreightment. . . .  225 

Ch.  n. — Contract  of  Bailment 226 

Part  I.— Definition,    Kinds  of  Neglects 226 

IL— Deposit 229 

III.— Mandate •. 234 

IV. — Loan  for  use 240 

v.— Pledge 244 

VL— Hiring 252 

VII. — Of  the  Common  Carrier 264 

Oh.  in. — Contract  of  Insurance  or  of  Indemnity  for  Loss 288 

Marine  Insurance. 

■     Part  I.— Nature  of  the  Contract  and  Parties 289 

IL — Subject  matter  and  Insurable  Interests 290 

III. — The  Policy  including  Representation  and  "War- 
ranty   296 

rV. — The  nature  of  the  Perils  insured  against 309 

V. — The  Voyage  embraced  in  the  Policy 315 

VI. — Proceedings  in  the  event  of  Loss 318 

Fire  Insurance. 

Part  I. — Insurable  Interests 328 

II. — The  Policy,  its  Contents,  Construction,  and  As- 
signment    330 

in. — Loss  and  Proceedings  thereupon 346 


Viii  CONTENTS. 

FAOV 

Life  Insurance. 

Cn.  IV. — Contract  of  Transfer  of  Property 359 

First— i?y  Sale 307 

Part  I.— TLiDg  to  bo  Sold 368 

II.— The  Prico  or  Equivalent 371 

III.— Tho  Assent  to  tho  Contract 378 

IV. — Certain  things  essential  to  the  completion  of  tho 

Contract 384 

v.— "Warranty. 393 

Second — By  Assignment 398 

Part  I. — Assignment,  by  Mvhom  made,  its  nature,  manner 

of  execution,  and  eflFect 398 

II. — Its  provisions  in  reference  to  its  validity 400 

III. — Delivery  of  Property  to  Assignee,  and  his  Rights 

and  Duties 409 

BOOK  IV. 

REMEDIES. 

Ch.  I.— Lien 413 

Part  I. — ^What  it  is,  and  to  whom  Applicable 413 

II. — Its  varieties  and  modes  of  acquisition 415 

III. — How  Lien  may  be  lost 424 

Ch.  II. — Stoppage  in  Transitu 430 

Part  I. — What  it  is.    Its  origin,  and  who  may  exercise  it.  480 
II. — "When,  and  under  what  circumstances,  the  right 

may  be  exercised,  and  when  lost 432 

III. — How  exercised  and  its  effect 439 

Chapter  on  the  Domestic  Relations 441 

Part  I.— Infancy _ 441 

II. — Marriage , 444 

III.— Husband  and  "Wife 446 

IV.— Parent  and  Child 456 

V. — Divorce 458 

Forms. — Practical  Remarks 463 

Index - 609 


BOOK  I. 

PROPEETY. 


CnAPTER   I. 

GENERAL. 


§  1.  This,  in  its  largest  sense,  is  the  right  which  a  man 
has  in  lands  and  chattels,  and  includes  every  species  of  acqui- 
sition in  -which  it  is  possible  to  have  an  interest.  Mercantile 
pursuits  are  almost  wholly  limited  to  Personal  Property, 
which,  as  contradistinguished  from  Peal,  means  that  which 
is  movable ;  which  passes  by  delivery  ;  which  descends  to 
the  next  of  kin  under  the  statute  of  distributions ;  which  is 
subjected  to  the  lien  of  an  execution,  and  not  of  a  judg- 
ment against  its  owner ;  and  on  the  sale  of  which,  by  its 
possessor,  there  is  .always  an  implied  warranty  of  title.  The 
division  into  goods,  chattels,  and  effects,  is  of  little  conse- 
quence commercially. 

§  2.  A  more  important  division,  in  a  mercantile  point 
of  view,  is  into  Things  or  Choses  in  Possession,  and  Tilings 
or  Choses  in  Action.  The  first  embraces  all  the  Property 
to  which  the  term  Personal  can  apply,  of  which  one  has 
possession ;  while  the  second  includes  all  such  as  the  owner 
has  not  in  possession,  but  in  which  he  has  a  right  of  action  ; 
which,  being  enforced,  will  possess  him  of  tlie  thing  it- 
self, or  its  equivalent  in  value.  An  illustration  of  the  first 
species  of  property  is  to  be  found  in  the  merchant's  stock  in 
1 


2  OIIOSICS    IN    ACTION. 

trade,  and  the  moneyed  equivalent  -wliicli  he  receives  on  its 
sale.  The  second  receives  a  similar  illustration  in  the 
charges  upon  his  books'  of  account,  and  the  Bonds,  Bills, 
Promissory  Notes,  or  other  securities  received  by  him  from 
the  purchaser. 

§  3.  Glioses  in  Action  by  the  Common  Law  are  not  as- 
signable, so  as  to  enable  the  assignee  to  sue  for  and  recover 
on  them  in  his  own  name.  An  exception  to  this  occurs  in 
the  case  of  Negotiable  Paper,  which  if  payable  to  bearer  may 
be  transferred  by  delivery,  and  if  to  order,  by  endorsement. 
In  Equity  all  Choses  in  Action  are  assignable,  so  as  to  give 
the  full  equitable  title  to  the  assignee,  and  the  legislation  of 
New  York  has  made  all  Choses  in  Action  assignable  at  Law. 

§  4.  All  Personal  Property  is  brought  under  the  same 
general  principle,  and  that  is,  that  no  act  of  man  can  render 
it  inalienable.  It  is  ever  the  policy  of  the  law  that  it  shall 
remain  free,  and  subject  to  all  the  contingencies  of  trade 
and  traffic. 

QUESTIONS. 

What  is  Property  ?  What  Personal  Property  ?  How  distinguished 
from  Eeal  ?  What  is  the  mercantile  division  of  Personal  Property  ? 
What  property  is  embraced  under  Things  or  Choses  in  Possession  ? 
What  under  Things  or  Choses  in  Action  ?  What  illustrations  of  each  ? 
Are  Choses  in  Action  assignable?  What  exception?  How  in  Equity? 
Is  Personal  Property  inalienable  ? 


CHAPTER  n. 

SPECIAL. 


This  includes  every  species  of  Personal  Property  which 
possesses  a  mercantile  character,,  such  as  Shipping^  Good 
Will^  Negotiable  Paper.     Of  these  we  have 


SHIPPIKG. 


I.    SHIPPIXG, 


§  5.  Tlie  important  inquiry  in  relation  to  shipping, 
regards  the  means  of  acquiring  and  transferi'ing  title.  The 
only  complete  mode  of  doing  this,  and  one  recognised  by 
the  maritime  courts  of  all  nations,  is  a  written  bill  of  sale. 
This  must  be  executed  by  the  owner ;  as  the  master  of  the 
ship,  unless  in  cases  of  extreme  necessity,  has  no  authority  to 
sell.  Ships  are  regarded  as  Personal  Property  ;  and  hence 
upon  a  sale  in  port,  a  delivery  of  possession  is  necessary  to 
consummate  the  purchase. 

§  6.  To  give  a  ship  an  American  character,  and  to  bring 
it  imder  protection  as  an  American  vessel,  it  is  necessary 
that  it  should  be  registered  at  the  custom-house.  To  entitle 
it  to  this  privilege,  the  owner,  or  part  owner,  must  be  a  citi- 
zen of  the  United  States,  and  ordinarily  reside  here,  or  be 
interested  as  a  partner  in  a  mercantile  house  having  here  its 
place  of  business.  In  case  of  a  change  of  owners,  a  bitl 
of  sale  is  necessary  in  order  to  effect  a  registry,  and  although, 
as  between  the  parties,  a  valid  sale  may  be  made  without  a 
transfer  in  writing,  yet  in  such  case,  the  vendee  would  be 
imable  to  avail  himself  of  the  privileges  which  would  other- 
wise attach  to  it  as  an  American  vessel.  An  unregistered 
ship  can  sail  on  no  voyage  with  the  privilege  or  protection 
of  a  national  character  or  national  papers. 

§  7.  Tlie  legislation  on  this  subject  is  by  Congress,  under 
the  constitutional  delegation  of  the  power  to  enact  laws  for 
the  regulation  of  commerce.  By  an  act  passed  in  1S50,  it 
is  rendered  necessary,  in  order  to  effect  any  person,  other 
than  the  vendor  or  mortgagor,  his  heirs  and  devizees,  or 
those  having  actual  notice,  to  have  any  bill  of  sale,  mort- 
gage, hypothecation,  or  conveyance,  recorded  in  the  oflSce 
of  the  collector  of  customs,  where  such  vessel  is  registered 
or  enrolled.  AVhether  this  will  be  held  to  control  or  super- 
cede State  legislation  relating  to  the  recording  or  filing  of 
mortgages  of  Personal  Property  to  render  them  constructive, 


t  INTEREST   AJS'D   EXTENT  OF    TOWEK. 

notice  to  third  i:)ersons  does  not  appear  to  liave  been  clearly 
settled.  This  ^vill  involve  the  constitutionalitj  of  this  act 
of  Congress,  and  also  some  other  considerations. 

§  8.  To  perfect  the  sale  of  a  shij)  while  abroad,  or  at 
sea,  the  delivery  of  the  bill  of  sale,  or  other  documentary- 
evidence  of  title,  operates  as  a  transfer ;  and  if  the  vendee 
within  a  reasonable  time  after  her  arrival  in  port,  takes  pos- 
session, his  title  will  prevail  against  that  of  a  subsequent 
purchaser  or  attaching  creditor ;  but  will  be  subject  to  all 
encumbrances  and  lawful  contracts  made  by  the  master 
relating  to  the  employment  and  hypothecation  of  the  ship 
prior  to  notice  of  the  transfer. 

§  9.  The  amount  of  interest  and  extent  of  power  that 
can  be  legally  exercised  by  a  part  owner  of  a  vessel  has 
been  a  question  of  difficult  settlement.  "VYhen  a  ship  con- 
stitutes a  part  of  the  capital  stock  of  a  partnership,  it  be- 
comes subject  to  the  same  principles  that  control  other  part- 
n'fership  property.  Otherwise,  the  several  part  owners  are 
remitted  to  the  rights  and  remedies  of  tenants  in  common. 
Each  can  sell  or  encumber  only  the  share  he  respec- 
tively owns.  But  in  every  thing  relating  to  the  repairs  and 
necessaries  of  the  ship  one  part  ovnier  is  regarded  as  agent 
for  the  others,  and  thus  entitled  to  act  for  them  ;  and  so  a 
master,  duly  appointed,  where  the  owners  are  accustomed 
to  divide  the  profits,  can  bind  them  all  by  contracts  made 
in  the  course  of  his  employment.  Where,  however,  the 
creditor  chooses  to  make  his  contract  with  one  part  owner, 
giving  him  alone  the  credit,  and  reserving  no  rights  or 
remedies  against  others,  he  is  considered  as  having  made 
his  election,  and  cannot  afterwards  look  to  the  other  part 
owners.  All  torts  or  wrongs  personally  committed  or  au- 
thorised, or  occasioned  to  third  persons  by  the  negligence 
of  one  or  more  part  owners,  will,  at  Common  Law,  render 
each  liable  severally  as  well  as  jointly.  But  for  wilful  or 
malicious  acts  of  injury  the  guilty  party  is  alone  liable. 
The  Common  Law  principle  which  permits  any  one  tenant  in 


GOOD   WILL.  O 

common  to  seize  upon  the  property  and  regulate  the  mode 
of  its  enjoyment  to  the  exclusion  of  the  rest,  being  account- 
able to  them  for  its  use,  is  so  modified  by  public  policy  as 
to  permit  the  Court  of  Admiralty  to  interfere  in  a  case  of 
conflict  of  opinion,  and  either  decree  a  sale  of  the  vessel, 
and  distribution  of  the  proceeds,  or  to  place  the  vessel  in 
the  possession  of  one  party  to  be  employed  in  some  voyage, 
on  condition  that  they  secure  to  the  other  its  safe  return  or 
a  full  indeminity  in  case  of  its  loss.  Tliis  rule  seems  not 
to  be  limited  to  cases  where  a  majority  of  part  owners 
constitute  the  moving  party,  but  embraces  also  those  in 
which  they  are  equally  divided  in  opinion,  giving  in  such 
case  the  right  to  employ  the  vessel  to  the  party  asking  it,  on 
giving  such  security  and  indemnity  to  the  other.  In  the 
absence  of  any  conflict  of  opinion  a  majority  of  the  part 
owners,  without  any  resort  to  Courts  of  Admiralty,  may 
manage  the  property  at  their  discretion ;  and  even  one  part 
owner,  under  the  same  circumstances,  may  employ  the 
vessel  as  he  may  deem  most  advantageous ;  his  acts  aiid 
contracts  in  such  employment  boing  binding  upon  the 
others.  As  to  the  party  standing  in  the  position  of  owner, 
and,  as  such,  liable  for  repairs  and  necessaries  procured  on 
the  order  of  the  master,  it  is  now  held  that  a  mortgagee  in 
possession  assumes  this  liability,  but  not  one  who  is  out  of 
possession.     Miln  v.  Spinola^  4  JIill^  177. 

n.    GOOD   'WILL. 

§  10.  The  second  species  of  Personal  Property  possessing 
a  mercantile  character,  is  "  good  will,"  a  question  as  to  the 
ownership  of  which  often  arises  on  the  dissolution  of  a  part- 
nership. This  consists  in  "  the  probability  that  the  old  cus- 
tomers will  resort  to  the  old  place."  The  question  presented 
has  been  whether,  on  the  death  of  a  partner,  the  good  will 
of  the  business  went  to  the  surviving  partners,  or  whether  it 
was  a  partnership)  effect,  and,  as  such,  liable  to  be  accounted 


G  NEGOTIABLE   TAPER. 

for  by  tlic  survivors/  So  far  as  concerns  professional 
partncrsliips,  there  seems  to  be  little  doubt  of  its  surviving, 
but  in  those  which  are  mercantile,  it  is  sometimes  of  great 
value,  and  in  proper  cases,  perhaps  in  all  cases  that  admit 
of  it,  the  Court  of  Chancery  will  direct  it  to  be  sold,  and 
will  restrain  the  fonner  owners  from  pursuing  a  business 
which  would  render  it  valueless  to  the  j)urchasers.  Dough- 
erty V.  Van  Nostrand^  1  Hoff.  Chan.  R.  68. 

§  11.  An  interest  somewhat  analogous  to  good  will  is 
the  right  to  the  exclusive  use  of  a  particular  name  or  mark 
upon  goods  and  merchandise,  usually  known  as  "  trade 
MARKS."  This  right  can  only  be  acquired  by  special  appro- 
priation and  undisturbed  enjoyment.  Tlie  name  or  marks 
to  which  the  right  attaches  must  be  such  as  designate  the 
origin  or  ownership  of  the  articles,  not  those  merely  indi- 
cating their  name  or  quality.  A  merchant  or  manufacturer 
will  not  be  permitted  to  use  the  name  or  trade  mark  of 
another,  although  he  may  be  ignorant  of  that  fact,  and 
Honestly  believe  it  is  made  use  of  for  a  merely  technical 
purpose.  In  cases  of  violation  of  this  right  the  Court  of 
Chancery  is  usually  applied  to  for  an  injunction  to  restrain 
all  further  use  of  the  name  or  mark.  In  granting  relief  in 
such  cases  the  Court  does  not  require  an  exact  similarity  to 
be  shown  between  the  two  marks.  It  is  enough  that  one  is 
so  closely  imitated  from  the  other  as  to  deceive  the  public 
and  draw  away  customers. 

m.    NEGOTIABLE  PAPER. 

§  12.  Tliethirdspeciesof  Personal  Property  possessing  a 
mercantile  character  is  "  negotiable  paper."  The  peculiar 
mercantile  character  that  serves  to  specialize  this  species  of 
property,  and  to  distinguish  it  from  every  other,  is  found  in 
its  transferable  quality.  The  general  rule  applicable  to  all 
sales  or  transfers  of  Personal  Property  is,  that  the  vendor 
transfers  no  greater  right  or  title  in  the  thing  sold  to  the 


holder's  eight  to  recover.  1 

vendee  than  he  himself  possesses.  But  under  some  circum- 
stances negotiable  paper  furnishes  an  exception.  When 
made  payable  to  bearer,  or  to  order  and  endorsed  in  blank, 
the  title  to  it  is  transferable  by  mere  delivery,  and  the 
vendee,  or  holder,  receiving  it  before  due  in  the  ordinary 
course  of  business  for  a  valuable  consideration,  and  without 
notice,  takes  it  discharged  of  all  the  defences  to  which  it 

•  TT 

might  have  been  subject  in  the  hands  of  a  prior  party.  He 
takes  it  on  the  credit  of  what  appears  upon  its  face,  and  not 
upon  the  faith  of  its  possessors'  title,  ilis  title  and  right  to 
recover  under  such  circumstances  is  never  doubted. 

QUESTIONS. 

What  kinds  of  property  are  specially  mercantile  ?  "What  are  the 
means  of  acquiring  and  transferring  title  to  shipping?  By  whom  is  the 
bill  of  sale  executed  ?  By  -n-hat  is  the  purchase  consummated  ?  "What 
renders  the  ship  an  American  vessel  ?  Who  are  competent  to  register  ? 
What  is  the  effect  of  sale  without  registry  ?  Where  rests  the  power  of 
legislation  in  reference  to  shipping,  and  under  what  authority  ?  What 
provision  as  to  recording  ?  llow  can  the  sale  of  a  ship  at  sea  be 
effected  ?  What  is  it  subject  to  ?  What  are  the  rights  of  part  owners 
of  vessels?  How  regarded  as  to  repairs  and  necessaries?  How  can 
creditor  preclude  himself  from  looking  to  all  the  part  owners  ?  Who 
are  liable  for  torts  or  wrongs?  Who  for  wilful  or  malicious  acts? 
When  can  a  Court  of  Admiralty  interfere,  and  with  what  effect  ?  How 
far  does  its  power  extend  ?  Where  there  is  no  conflict  of  opinion  who 
may  manage  the  property,  and  how,  and  with  what  effect  ?  Who  may 
occupy  the  position  of  owner?  What  is  Good  Will,  and  when  do 
questions  concerning  it  arise,  and  what  are  they  ?  What  the  rule  in 
professional  partnerships?  What  in  mercantile?  How  can  a  right  to 
Trade  Marks  be  acquired  ?  What  must  they  be  ?  What  is  the  usual 
remedy?  What  is  required  to  be  shown  to  secure  the  relief?  What 
gives  Negotiable  Paper  its  peculiar  mercantile  quality  ?  In  what  doe* 
it  specially  consist  ? 


BOOK  11, 

a 

P  E  E  S  O  K  S  . 


CHAPTER  I. 

THE     SOLE     TRADER. 

§  13.  The  occupation  of  Trader  or  Merchant  has  a 
character  far  less  distinctive  in  this  country  than  in  England. 
With  us  every  man  is  a  Trader^  not  only  who  carries  on 
trade  and  traffic  as  a  business,  but  who  does  any  act  upon 
which  any  of  the  rules  of  mercantile  law  operate,  so  far  at 
least  as  that  act  is  concerned.  Even  the  drawing  a  bill  of 
exchange  makes  the  drawer,  as  to  that  bill,  a  Merchant. 

§  14.  So  vigilant  is  the  law  in  guarding  the  rights  of 
individuals  and  communities,  that  it  will  not  permit  a  trader 
to  divest  himself  of  the  right  of  carrying  on  anywhere  his 
trade  or  occupation.  Any  contract,  although  resting  upon 
a  sufficient  consideration,  by  which  a  man  precludes  himself 
either  from  carrying  on  any  trade,  or  any  particular  trade 
any  where,  is  void,  as  being  against  public  policy.  A 
contract  in  partial  restraint  of  trade  may  be  enforced ;  but 
the  limits  within  which  it  is  to  operate,  must  be  reasonable, 
and  such  as  barely  serve  for  adequate  protection  to  the  other 
party.  A  merchant  may,  for  a  sufficient  consideration,  sell 
to  another  his  right  to  carry  on  trade  within  certain  defined 
limits ;  but  those  hmits  must  be  such  as  the  purchaser  reason- 


ALIENAGE ESTFAl^CY MAKEIAGE.  9 

ablj  requires  for  his  own  protection,  and  this  must  be  made 
out  by  the  party  seeking  to  enforce  the  contract,  as  the 
\diw,  prima  facie,  renders  all  such  void. 

§  15.  The  sole  trader  may  labour  under  such  disabilities 
as  may  entirely  prevent,  or  essentially  impair,  his  right  to 
carry  on  his  trade.     These  are 

1.  Alienage.  An  alien  friend,  or  subject  of  a  power  at 
peace  with  this  country,  is  under  no  such  restrictions,  as  re- 
gards Personal  Property,  that  will  prevent  him  from  carry- 
ing on  here  his  trade  and  occupation.  But  an  alien  enemy, 
or  one  whose  country  is  at  war  with  this,  and  a  resident 
Jiere,  although  permitted  by  courtesy  to  sue  and  be  sued  as 
in  time  of  peace,  would  yet  find  too  many  obstacles  in  the 
way  of  carrying  on  any  trade  or  business. 

The  second  legal  disability  \^  Infancy  ;  but  the  acts  and 
transactions  of  an  infant  trader,  or  one  under  twenty  one 
years  of  age,  may  be  ratified,  and  thus  rendered  valid  after 
arriving  at  majority. 

The  third  is  Marriage  on  the  part  of  the  wife ;  in 
which,  at  common  law,  there  not  only  exists  the  incapacity 
to  do  any  act  that  may  be  legally  binding,  but  also  the 
further  incapacity  of  any  subsequent  ratification  that  will 
have  that  eflfeet.  In  some  of  the  States,  as  in  that  of 
New  York,  legislation  has  not  only  given  the  capacity  of 
receiving  and  holding  Personal  Property,  but  also  of  trading 
and  carrying  on  any  branch  of  business. 

QUESTIONS. 

"Who  is  a  trader  ?  ITow  is  a  contract  in  general  restraint  of  trade 
as  to  validity  ?  llow  of  partial  ?  "^'Lat  necessary  to  render  it  valid  ? 
What  is  the  first  disability  ?  To  what  kind  of  alien  particularly  applic- 
able ?  What  the  second  disability  ?  How  acts  done  under  it  legalized  ? 
What  the  third  ?  Wherein  does  it  differ  from  the  second  ?  What  in 
some  of  the  States  have  removed  it,  and  how  far  ? 


10  COMMTJITITY  OF  PEOFIT. 

CHAPTER  II. 

PARTNERSHIP  AND  PARTNERS  AS  COMMERCIAL  PERSONS.    . 
PART  I. 

A  PAETNEESmP  "WHAT,    AND  HOW  POEMED. 

§  16.  A  partnership  results  from  a  contract  by  •which 
"  two  or  more  persons  agree  to  combine  their  property  or 
labor  for  the  purpose  of  a  common  undertaking,  and  th^ 
acquisition  of  a  common  profit."  The  power  it  gives  to 
one  partner  over  the  fortunes  of  all  the  others,  renders  it 
important  to  determine  when  that  relation  really  exists,  as 
the  attempt  is  often  made  to  realise  its  benefits  without  sub- 
jecting to  its  liabilities.  This  originates  the  inquiry  as  to 
its  manner  of  formation,  and  what  features  in  a  contract  are 
essential  in  its  creation, 

§  17.  The  important  feature  is  the  stipulation  for  a 
community  of  profit.  Although  that  oi  freedom  from,  loss 
will  be  good  as  between  the  parties,  yet  it  will  have  no 
efl'ect  on  the  liability  to  third  persons.  The  nature  of  the 
contribution,  whether  of  capital  stock  or  services,  does 
not  vary  the  result.  Ko  partnership  can  legally  arise 
unless  the  idea  of  profit  enter  into  it  as  an  element.  Thus 
each  contributing  a  sum  for  a  joint  purchase  after  which 
there  is  to  be  a  proportional  distribution  among  the  con- 
tributors is  no  partnership.  To  create  that  there  must  be  a 
re-sale^  out  of  which  may  arise  a  profit.  But  a  joint  contri- 
bution to  carry  on  a  manufactory,  with  an  agreement  for  a 
pro-rata  division  of  the  manufactured  articles,  will  create  a 
partnership  without  a  sale,  because  the  element  of  profit  is 
there  apparent.     Miisier  v.  Trumpbour^  5  Wend.  274. 

§  IS.  The  participation  in  the  profits  to  constitute  a 
partnership  must  have  this  qualification,  viz.,  it  must  be  a 


FORMATION   OF  PAETlfERSHIPS.  11 

sharing  in  tliem  as  a  j9r^?l(?^/;aZ,  and  not  as  an  agent  or 
sei^ant.  A  practice  among  business  men,  not  nnfrequent,  is 
for  one  to  furnisli  all  tLe  necessary  capital,  and  another  his 
services  receiving  a  compensation  according  to  the  amount  of 
profits  that  may  be  realized.  This  often  creates  a  difficulty 
in  determining  whether  it  be  a  partnership  or  an  agency. 
The  former  is  created  wherever  a  I)arty  has  stipulated  for  a 
share  in  the  profits,  as  profits,  so  as  to  entitle  him  to  an 
account  and  specific  lien,  or  a  preference  in  payment  over 
other  creditors,  for  he  is  then  justly  regarded  as  a  principal, 
and  entitled  to  all  the  benefits  of  a  partner.  But  if  the 
stipulation  is  for  a  remuneration  in  proportion  to  profits,  or 
out  of  profits,  even  though  they  are  net  profits ;  without 
conferring  any  proprietary  interest  in  the  capital  stock  or 
accruing  credits,  or  any  such  interest  in  the  profits  as  to 
entitle  him  to  demand  an  account,  it  is  a  mere  agency. 
Buckle  v.  EckTiart^  3  Comst.  132. 

§  19.  To  the  formation  of  all  partnerships,  where  no 
power  to  the  contrary  is  contained  in  the  articles,  the  mutual 
assent  of  all  the  partners  is  essential.  Ilence,  althougl^  one 
partner  may  form,  with  a  third  person,  a  sub-j)artnership, 
yet  he  cannnot  introduce  any  such  into  the  partnership 
without  first  obtaining  the  consent  of  all  the  partners. 

§  20.  Tlie  evidence  upon  which  a  partnership  rests  maj 
be  three  fold ;  or  there  are  three  difi'erent  modes  of  form^ 
ing  it. 

1.  By  articles  fomially  executed  and  delivered. 

2.  By  a  verbal  agreement. 

3.  By  the  acts  of  the  parties. 

In  case  the  first  mentioned  are  resorted  to,  the  parties 
should  have  inserted  in  them  all  the  provisions  and  stipula- 
tions they  desire  enforced  against  their  co-partnei;s.  But 
even  where  partnerships  arc  sought  to  be  formed  and  evi- 
denced either  by  written  articles  or  by  a  verbal  contract, 
the  acts  of  the  partners,  or  the  partnership,  continued  and 
sanctioned  by  themselves,  will  control  the  provisions  of  the 


12  BUSINESS  PAETNEESHIP8. 

written  instrument ;  for  it  is  a  familiar  principle  in  constru- 
ing and  giving  effect  to  written  articles,  that  they  ard  to  be 
read,  cs])ecially  in  equity,  as  containing,  or  not  containing, 
all  those  provisions  or  stipulations  ujion  which  the  partners 
have,  or  have  not,  acted.  It  is,  therefore,  the  course  of 
action,  and  not  original  stij^ulation,  that  determines  what  is 
the  real  agreement  among  the  partners.  Such  is  the  impor- 
tance given  to  acts,  that  it  is  entirely  competent  for  a  person, 
not  a  partner,  to  render  himself  liable,  as  such,  to  third 
persons,  by  holding  himself  out  as  such,  upon  the  strength 
of  which  they  have  been  induced  to  act.  But  such  holding 
out,  although  creating  a  liability  to  third  persons  who  act 
upon  the  strength  of  it,  fails  nevertheless  in  rendering  such 
person  a  partner,  as  there  is  still  wanting  the  element  of 
consent  upon  which  alone  he  can  be  received. 

QUESTIONS. 

"What  is  a  partnership?  "What  important  feature  constitutes  it? 
What  one  is  essential  to  it?  "What  important  qualification?  "What 
crea^ps  a  partnership  as  contradistinguished  from  an  agency  ?  "What  an 
agency  as  contradistinguished  from  a  partnership  ?  "What  is  necessary 
to  the  formation  of  all  partnerships  ?  What  different  modes  of  forming 
it?  "What  controls,  where  there  are  -written  articles  ?  How  are  written 
articles  to  he  read  ?  How  may  a  person,  not  a  partner,  render  himself 
liable  as  such  ?    Does  such  liability  make  him  a  partner  ? 

PART  II. 

ITS  DIFFEEEXT  KINDS — BOTH  AS   TO   PAETITEESniP  AIH)  PAETIfEES. 

§  21.  Partnerships  may  be  formed  for  the  prosecution 
of  every  legal  branch  of  business.  They  may  be  formed 
for  a  series  of  operations  in  one  or  more  kinds  of  business, 
or  they  may  be  limited  to  a  single  adventure.  The  number 
of  partners  has  no  necessary  limitation.  A  species  of 
partnership  quite  common  in  this  country  is  what  are 
termed  joint  stock  comtanies.  These  come  under  the 
same  general  principles  as  all  other  partnerships  except  that 


LIABILrnES   OF   STOCKHOLDERS.  13 

the  great  multitude  of  partners  compels  the  adoption  of  cer- 
tain peculiar  regulations  for  tlie  government  of  the  concern. 
§  22.  The  manner  in  which  these  companies  are  formed  ; 
the  amount  to  be  subscribed ;  the  number  of  shares  of  stock ; 
the  mode  of  transfer ;  all  the  provisions  and  stipulations 
deemed  necessary,  arc  embraced  in  the  articles  entered  into 
between  the  stockholders.  These  regulate  the  right  of  the 
members  among  themselves.  The  management  of  the  affairs 
of  the  company  is  confided  to  the  directors  and  their  agents. 
They  make  the  calls  upon  the  unpaid  shares,  and  these  may 
be  made  to  take  effect  infuturo.  A  member  of  the  com- 
pany is  entitled  to  the  benefit  of  all  its  contracts,  and 
responsible  for  engagements  made  by  its  agents,  for  jiurposes 
contemplated  in  its  formation.  His  liability  commences 
with  the  commencement  of  the  company,  and  he  is  not 
responsible  for  contracts  made  before  that  period  by  its 
intended  members  or  du-ectors,  while  any  preliminaries  are 
unaccomplished,  the  performance  of  which  formed  the 
condition  upon  which  he  agreed  to  join.  Even  the  members 
of  a  provisional  committee  do  not,  by  being  such,  authorize 
the  other  members  to  pledge  their  credit  for  things  neces- 
sary to  establish  the  company.  The  publication  of  their 
names  as  such  members  will  not  render  them  liable. 
Where,  however,  they  have  done  acts  in  relation  to  the  pro- 
posed company,  a  foundation  is  laid  upon  which  to  ground 
a  liability.  "Without  a  power  to  that  effect  given  in  the 
articles,  one  member  cannot  bind  the  others  by  negotiable 
mstruments.  So,  also,  as  the  general  power  to  contract  is 
through  the  medium  of  directors  or  agents,  the  contract  of 
a  private  member  Would  not  bind  the  others,  except  so  far 
as  recognized  and  adopted  by  them.  In  the  absence  of  any 
special  provision,  the  liability  of  a  member  is  determined 
in  the  same  manner  as  that  of  an  ordinary  partner. 

§  23.  Tlie  legislation  of  New  York  and  several  other 
States  has  authorized  the  formation  oi  Limited  Partnerships, 
which  consist  of  one  or  more  persons  who  arc  held  out  to 


14  NOMINAL,    KEAL,    AND.  DOR^LANT   PARTNERS. 

tlic  world  as  the  real  ostensible  partners,  and  who  are  the 
active  business  parties  in  its  concerns,  and  who  encounter  the 
liability  of  ordinary  partners,  while  one  or  more  others  are 
pcnnitted  to  put  into  the  concern  a  certain  amount  of  capital, 
and  to  have  their  liability  to  the  partnership  creditors  limited 
to  the  sum  actually  contributed.  Their  names  are  not  to  ap- 
pear in  the  firm,  nor  are  they  to  transact  business  on  its  ac- 
count. Several  special  provisions  are  prescribed  by  statute, 
all  which  must  be  strictly  and  literally  complied  with,  or  the 
limitation  will  cease,  and  all  will  become  liable  as  general 
partners. 

§  24.  There  are  three  different  kinds  of  j)artners. 

1.  Tlie  nominal,  who  has  no  actual  interest  in  the 
business  or  profits,  and  therefore  is  no  partner  as  between 
themselves ;  but  as  to  third  persons  he  assumes  the 
responsibility  of  a  partner  by  voluntarily  suffering  his 
name  to  appear  as  such,  thus  lending  the  partnership  the 
sanction  of  his  credit. 

2.  The  real,  ostensible,  who  is,  and  appears  such,  to  the 
world ;  and  who,  as  such,  takes  all  its  benefits  and  risks. 

3.  The  dormant  or  concealed,  who  is  a*  real  partner  as  to 
actual  participation  in  its  benefits,  but  who  endeavors  to 
avoid  its  risks  and  liabilities  by  keeping  the  fact  of  his 
interest  concealed.  His  name  does  not  appear  in  the 
firm.  In  the  view  of  the  world  he  takes  no  interest  in  its 
concerns.  He  seeks  the  benefit  of  the  Limited  Partner 
without  encountering  his  trouble  and  risk.  The  result  of 
this  is,  that  so  long  as  he  can  keep  perfectly  concealed,  he 
avoids  all  liability  to  the  partnership  creditors.  But,  if  his 
name  becomes  disclosed,  and  his  interest  known,  he  becomes 
equally  liable  as  the  other  partners,  whether  the  creditor 
trusted  the  firm  upon  the  strength  of  his  membership  or 
not.  His  liability  in  such  case  is  groimded  not  on  the 
credit  given,  but  on  the  contract  between  him  and  his  co- 
partners, by  which  he  really  becomes  a  member  of  the 
firm,  and  hence  liable  for  its  debts. 


EIGHTS  A^TD   LIABILITIES  OF   PARTNERS.  15 

In  addition  to  those  is  tlie  Limited  ^artnei\  who  is  a 
creature  of  legislation. 

QUESTIONS. 

"What  branches  of  'business  may  partnerships  be  formed  to  prose- 
cute ?  How  is  the  formation,  stock,  mode  of  transfer,  and  other  pro- 
visions of  joint  stock  companies,  regulated  ?  To  whom  is  the  manage- 
ment of  such  confided?  What  are  the  members  entitled  and  subject 
to  ?  "When  does  the  liability  commence  ?  For  what  is  ho  not  respon- 
sible ?  Are  members  of  a  provisional  committee  liable  for  the  acts  of 
other  members  ?  Does  the  publication  of  their  names,  as  such,  render 
them  liable  ?  Do  their  acts,  as  such  ?  "What  power  of  members  to  bind 
by  negotiable  instruments  ?  What  by  other  contracts  ?  How  is  the 
liability  determined  ?  What  authorizes  the  formation  of  limited  partner- 
ships ?  What  do  they  consist  of?  Wherein  is  the  limitation  ?  What  is 
the  risk  incurred  by  not  following  strictly  the  statute  provisions  ?  How 
many  kinds  of  partners  ?  What  the  nominal,  the  ostensible,  the  dor- 
mant f  What  the  rights  and  liabilities  of  each  ?  On  what  are  the 
liabilities  of  the  dormant  founded? 

PART  III. 

THE   EIGHTS  AND  LIABILITIES   IT  CONFERS  AND   IMPOSES   rPON   EACH   PART- 
NER  AS  AGAINST,  AND   IN    FAVOR    OF,   THE    OTHERS. 

§  25.  The  proper  understanding  of  the  law  of  partner- 
ship requires  the  recognition  of  three  legal  entities,  and 
three  sets  of  relations :  these  are 

1.  The  Partners  themselves,  and  the  relations  between 
each  other,  growing  out  of  the  partnership. 

2.  The  Partner shijp,  and  the  relations  between  it  and 
the  partners,  and  between  it  and  third  persons. 

3.  Third  Persons,  and  the  relations  existing  both  be- 
tween them  and  the  partnership,  and  between  them  and  the 
partners. 

§  26.  Tlie  establishment  of  the  partnership  clothes  the 
partners  with  new  powers,  and  devolves  upon  them  new 
duties,  having  reference  both  to  the  partnership  fund,  and 
to  their  duties,  rights,  and  remedies,  as  against  each  other. 
To  the  first  they  bear  the  relations  of  joint  tenants  without 


13  WnAT   CONSTITUTES   PAHTNEKSHIP   STOCK  ? 

right  of  survivorship.  "While  the  tenant  in  common  can 
only  soil  and  convey  the  interest  belonging  to  himself  in  the 
common  i)roi)erty,  the  partner  may  dis})Osc  not  only  of  his 
proportional  interest  in  the  joint  stock,  but  also  of  the 
interest  of  all  his  co-partners,  and  thus  give  a  j^erfect  title 
to  the  purchaser. 

§  27.  The  courts  have  experienced  a  difficulty  in  affixing 
a  limit  to  what  may  constitute  partnership  stock.  This  has 
more  especially  occurred  in  regard  to  real  estate,  which 
differs  so  essentially  from  personal  in  its  nature,  destination, 
and  the  legal 'principles  upon  which  its  enjoyment  and 
transfer  depend.  It  is  now  considered  that  when  purchased 
with  partnership  funds,  and  made  use  of  for  partnership 
purposes,  it  is,  in  equity,  chargeable  with  the  partnership 
debts,  and  with  any  balance  which  may  be  due  from  one 
partner  to  another,  upon  the  winding  up  of  the  affairs  of 
the  firm.  And  that,  as  between  the  personal  representatives 
and  heirs  at  law  of  the  deceased  partner,  his  share  of  the 
surplus  of  such  real  estate  which  remains  after  paying  the 
partnership  debts  and  adjusting  the  equitable  claims  of  the 
different  members  of  the  firm,  as  between  themselves,  is 
considered  and  treated  as  real  estate. 

§  28.  Another  limit  to  what  may  constitute  partner- 
ship stock  is  found  in  the  nature  of  the  partnership  agree- 
ment, as  when  it  embraces  only  the  profits  that  may 
accrue  from  a  particular  business.  A  party  who  is  the 
owner  of  goods  enters  into  an  agreement  with  another,  by 
which  they  each  agree  to  make  use  of  their  joint  efforts  to 
effect  a  sale  or  sales,  and  divide  between  them  the  resulting 
profits.  Such  goods  continue  the  property  of  the  owner, 
and  do  not  form  a  joint  stock  in  which  each  has  an  interest. 
It  is  a  partnership  merely  in  the  profits.  It  is  the  intention 
of  the  parties  that  is  to  determine  what  shall  be  the  joint 
stock  belonging  to  the  partnership,  and  in  which  the  part- 
ners may  have  equal  rights. 

§  29.  The  amount  or  quantity  of  interest  each  partner 


AGREEMENT  BETWEEN  PAHTNEES.  17 

possesses  in  tlic  s'tock  business,  and  profits,  is  usually  regu- 
lated by  agreement.  Where  it  fails  to  be  so,  the  presump- 
tion is  that  the  partners  are  entitled  in  equal  proportions. 

§  30.  The  duties  of  partners  towards  each  other  enforce 
the  utmost  good  faith.  Neither  can  be  permitted  to  stipu- 
late for  any  private  advantage  at  the  expense  of  the  others  ; 
nor  can  one  place  himself  in  a  situation  likely  to  give  him- 
self an  interest,  or  even  a  bias,  against  the  discliarge  of 
his  duty.  Each  impliedly  stipulates  to  devote  himself  to 
the  partnership  business,  and  hence  one  can  neither  charge 
the  firm,  nor  any  other  partner,  for  any  service  rendered  in 
the  business  of  the  concern,  unless  there  is  a  special  agi'ee- 
ment  to  that  efi'ect,  or  such  a  course  of  conduct  adopted 
and  followed  up  by  the  parties  as  will  lead  to  an  inference 
of  such  an  agreement. 

§  31.  The  agreement  between  the  partners  which  origi- 
nates the  partnership,  generally  sx:>ecifies  the  business  to  be 
carried  on,  or  the  thing  to  be  done ;  the  time  of  its  com- 
mencement ;  the  period  of  its  continuance  ;  the  amount  of 
capital  stock,  and  the  proportions  to  be  advanced  by  each  ; 
the  proportion  of  profits  to  which  each  shall  be  entitled ; 
the  respective  duties  to  be  performed  by  each  (although 
that  is  unnecessary) ;  and  not  unfrequently  that  accounts  be 
annually  taken  of  the  debts  and  effects  of  the  partnership, 
and  the  particular  mode  of  winding  np  its  afiairs  to  be 
pursued  upon  its  dissolution ;  consisting  either  in  converting 
the  effects  into  money,  and  distributing  among  the  partners 
in  proportion  to  their  respective  interests,  or  by  the  transfer 
of  one  partner's  share  to  the  other  at  a  valuation  stipulated, 
or  to  be  ascertained  by  a  proceeding  therein  specified. 
Sometimes  the  agreement  provides,  that  in  the  event  of 
death  the  executor  shall  continue  the  partnership  with  the 
survivor  for  tlie  benefit  of  the  heirs  or  next  of  kin  of  the 
deceased  partner,  and  in  such  case  the  executor  must  either 
renounce  or  comply  with  the  provisions  of  the  will,  in 
2 


18  POWEB  TO   BKING   ACTION   AT   LAW. 

which  latter  case  lie  8iibject3  himself  to  all  the  personal 
liability  of  a  partner. 

§  32,  During  the  continuance  of  the  partnership,  part- 
ners can  very  seldom  bring  an  action  at  law  against  each 
other.  One  i)artner  may  bring  such  action  against  another 
in  a  case  of  breach  of  covenant,  or  to  recover  money  ad- 
vanced before  the  partnership  and  in  order  to  its  formation. 
So  also  for  work  done  for  a  firm  before  he  became  a  mem- 
ber of  it.  So  also  where  there  has  been  a  settlement, 
balance  struck,  and  a  promise  to  pay.  So  also  on  transac- 
tions that  are  separated  and  form  no  part  of  the  joint 
account,  and  on  the  negotiable  paper  of  his  partner,  although 
for  value  received  on  the  partnership  account.  But  the 
rights  and  remedies  of  partners  against  each  other  in  refer- 
ence to  all  matters  growing  out  of,  or  connected  with,  part- 
nership transactions,  unless  in  a  few  very  special  exceptions, 
are  enforced  and  pursued  in  courts  of  equity,  which  afford 
superior  facilities  for  dissolving  and  winding  up  the  affairs 
of  a  partnership. 

QUESTIONS. 

"What  are  the  legal  entities  and  sets  of  relations  involved  in  a  part- 
nership ?  How  do  partners  stand  related  to  the  partnership  fund  ? 
What  interest  does  a  tenant  in  common  convey  ?  What  a  partner  ? 
Under  what  circumstances,  and  for  what  may  real  estate  be  chargeable 
as  partnership  stock?  How  considered  as  between  personal  represen- 
tatives and  heirs  at  law  of  the  deceased  partner  ?  What  limit  to  part- 
nership stock  growing  out  of  the  nature  of  the  agreement  ?  What  does 
agreement  regulate  as  to  amount  or  quantity  of  interest  ?  What  is  the 
presumption  when  not  so  regulated  ?  What  do  the  duties  of  partners 
enforce  towards  each  other?  What  implied  stipulation  by  each? 
When  can  one  charge  another  for  services  rendered  ?  What  are 
the  general  stipulations  contained  in  a  partnership  agreement  ?  When 
may  one  partner  bring  an  action  at  law  against  another  during  the 
continuance  of  the  partnership  agreement  ?  Where  are  the  rights 
and  remedies  of  partners  against  each  other  generally  pursued  ? 


PAKTNEESHIP   EIGHTS.  19 


TART  rV. 

THE  BIGHTS  IT   GIVES  TO  THE   PARTXEKSHIP,  ASD  TO   PAETXEES,  AGAINST 
THIKD   PEBS0N8. 

§  33.  Tlie  contract  entered  into  between  the  partners 
creates  a  legal  entity — the  partnershij).  This  entity,  like 
the  corporation,  has,  for  many  purposes,  a  distinct  legal 
existence  separate  from  every  other,  and  possessing  rights 
recognized  in  courts  of  law  and  equity.  It  is  in  virtue  of 
this  that  it  becomes  clothed  with  a  mercantile  character, 
and  assumes  duties  and  responsibilities,  and  to  enforce  rights 
much  the  same  as  a  natural  person.  It  is,  therefore,  impor- 
tant that  it  should  have  a  7ia)ne  in  which  its  books  should 
be  kept,  and  its  business  transacted.  It  is  of  little  impor- 
tance what  it  is — whether  it  be  that  of  one  of  the  partners, 
or  a  combination  of  a  part  or  the  whole  of  theirs. 

§  34.  A  fact  illustrating  the  individuality  and  separate 
entity  of  the  partnership  is  found  in  the  principle,  that 
when  a  security  is  executed  to  a  partnership  by  its  firm 
name,  as  a  bond  of  indemnity  for  the  faithful  performance 
of  duty  by  a  clerk,  any  change  in  the  partnership  and  in 
its  name,  will  render  the  security  inoperative  as  to  all  events 
occurring  subsequently  to  such  change. 

§  35.  A  partner  borrowing  money  of  another  for  the 
partnership,  although  he  converts  it  to  his  own  use,  renders 
the  partnership  a  debtor  to  the  lender.  Borrowing  money 
on  his  own  credit,  although  he  applies  it  to  partnership  pur- 
poses, renders  himself,  and  not  the  iiartnership,  the  debtor. 
Borrowing  it  in  the  course  of  the  partnership  business,  with- 
out specifying  for  whom,  and  applying  it  to  partnership 
purposes,  enables  the  lender  to  look  to  the  partnership  as 
his  debtor.  One  partner  selling  the  goods  of  the  partner- 
ship, although  he  misapplies  the  proceeds,  will  be  held  to 
have  given  a  good  title  to  the  veudee.  Bnt  one  partner 
cannot  apply  the  jjartnership  property  to  the  payment  of 


# 


20  EIGHTS  agai:n'St  tiiied  peesons. 

his  own  separate  debt  without  the  assent  of  his  co-partners, 
even  although  the  creditor  was  ignorant  that  he  was  receiv- 
ing partnership  property.  It  is  a  mere  question  of  right, 
and  of  property,  and  knowledge  or  ignorance  cannot  aifect 
or  vary  the  nature  of  the  transaction.  In  a  case  within  the 
statute  of  frauds,  and  hence  required  to  he  in  writing,  a 
guarantee  given  to  a  single  partner  may  be  available  to  the 
firm,  where  proof  is  adduced  that  it  was  given  for  the  benefit 
of  all.  And  even  a  guarantee  without  any  address  would 
enure  to  the  benefit  of  those  to  whom,  or  for  whose  use,  it 
was  delivered. 

§  36.  The  rights  of  the  partnership  against  third  persons 
may  be  divested  by  the  act  of  one  of  the  partners.  One 
partner  may  release  a  debt  due  to  the  firm.  Payment  to 
one  partner  of  a  partnership  debt  is  a  payment  to  all,  and 
that  even  although  made  after  dissolution,  and  with  an 
agreement  that  another  partner  shall  receive  all  the  joint 
debts.  One  partner  may  give  time  to  the  partnership 
debtor,  either  directly,  or  indirectly,  by  taking  his  bill  or 
note  payable  at  a  future  day ;  or  he  may  preclude  the  part- 
nership from  suiDg,  by  some  act  which  would  render  it 
unconscientious  in  himself  to  do  so. 

QUESTIONS. 

"WTiat  does  the  contract  between  partners  create  ?  Wliat  is  the  entity 
like  ?  "What  does  it  possess  ?  "What  assnme  ?  What  should  it  have  ? 
What  fact  illustrates  its  individuality  ?  Under  what  circumstances  is  a 
debt  of  the  partnership  created  ?  Under  what  a  debt  of  the  partner  ? 
Can  a  partner  apply  partnership  property  to  the  payment  of  his  separate 
debt?  How  if  creditor  is  ignorant  that  it  is  partnership  property? 
Can  a  guarantee  given  to  a  partner  be  available  to  the  firm  ?  How  as 
to  a  guaratee  hairing  no  address  ?  Can  a  partner  divest  the  partnership 
of  rights  against  third  persons?  How?  What  is  a  payment  to  one 
partner?  Can  one  partner  give  a  partnership  debtor  time  directly? 
Indirectly,  how  ?    How  preclude  the  partnership  from  suing  ? 


BINDING   BY    SIMPLE   CONTEACT.  21 


PART  V. 

THE  BIGHTS  IT  GIVES  TO  THIRD   PERSONS,   BOTH  AGAIKST  THE    PAETXEE- 
SniP,  AXD   THE   PAETNEES. 

§  37.  This  involves  tlie  inquiry  as  to  liow  far  one  part- 
ner can  bind  his  firm,  so  as  to  give  rights  against  it  to  third 
persons.  The  general  rule  is,  that  "  each  partner  is  the 
accredited  agent  of  the  rest,  whether  they  he  active,  nominal, 
or  dormant,  and  has  authority  as  such  to  hind  them,  either 
hy  simple  contracts,  respecting  the  goods  or  husiness  of  the 
firm,  or  hy  negotiahle  instruments  circulated  in  its  hchalf 
to  any  person  dealing  honafideP  To  such  an  extent  is  this 
rule  carried,  that  where  two  firms  have  a  common  partner, 
and  a  common  name,  each  one  is  competent  to  bind  the 
other  to  the  payment  of  negotiable  securities,  drawn,  en- 
dorsed, or  accepted  in  that  common  name. 

§  38.  Tlie  limitation  is  to  the  mode  of  hinding,  ichich  is 
hy  simple  contract.  One  partner  cannot  bind  the  firm  by  a 
deed,  or  in  general  by  an  instrument  under  seal.  .  But  tliis 
rule  has  its  exception  and  limitation.  The  release  of  a 
partnership  debt  under  seal,  which  a  partner  may  legally 
do,  presents  the  exception.  Tlie  limitation  or  modification 
is  found  in  the  principle  permitting  one  partner  to  bind  the 
firm  by  an  instrument  under  seal  in  its  name  and  for  its  use, 
when  done  in  the  course  of  the  partnership  business,  pro- 
vided the  co-partners  assent  to  the  contract  previously  to  its 
execution,  or  afterwards  ratify  and  adojDt  it,  and  either  may 
be  done  verbally. 

§  39.  Another  important  limitation  embraced  in  the 
general  rule  is,  that  the  contract  must  he  respecting  the  pa)  *- 
nership  husiness.  Tlie  true  construction  of  the  rule  is — that 
the  act  or  assurance  of  one  partner,  made  with  reference  to 
business  transacted  by  the  firm,  will  bind  all  the  partners. 
Every  man  is  presumed  to  know  the  extent  of  the  partner- 
ship, with  whose  members  he  deals,  and  has  therefore  no 


22  MAKING   AJffD   ISSUINO   OF  NEGOTIABLE   PAPER. 

right  to  take  a  partnership  engagement  in  a  matter  having 
no  reference  to  the  business  of  the  firm,  and  not  within  the 
scope  of  its  authority,  or  its  regular  course  of  dealing,  with- 
out first  obtaining  the  consent  or  authority  of  the  firm. 

§  40.  When  these  conditions  are  complete — the  business 
relating  to  the  firm — and  the  third  person  acting  in  good 
faith^ — the  partnership  will  be  bound,  although  the  partner 
may  have  acted  in  fraud  of  his  co-partners.  Having  held 
him  out  to  the  world  as  a  partner  and  accredited  him  as 
such,  they  are  compelled  to  abide  by  his  acts  done  within 
the  general  scope  of  the  partnershij)  transactions.  Ilence, 
if  he  purchase  goods,  such  as  might  be  used  in  the  firm 
business,  and  then  convert  them  to  his  own  use,  the  firm 
must  pay  for  the  goods. 

§  41.  The  most  dangerous  power  which  a  partner  can 
exercise,  in  its  eftect  upon  the  safety  of  the  other  partners, 
is  by  the  making  and  issuing  of  negotiable  paper  on  behalf 
of  the  firm.  It  is  thus  in  the  power  of  a  partner,  within  the 
briefest 'period  of  time,  to  realize  money  on  negotiable  paper 
of  a  solvent  firm,  made  by  him,  the  paper  having  some  time 
to  run,  and  readily  passing  into  circulation,  and  the  firm 
will  be  left  liable  for  its  payment  as  soon  as  it  matiu*es. 
The  necessities  of  trade  and  the  peculiar  nature  of  nego- 
tiable paper,  preclude  the  afiixmg  here  of  any  legal  limita- 
tions, that  can  be  efiectual  to  prevent  it. 

§  42.  All  such  paper,  however,  must  be  in  the  name  of 
the  2)artnershi]).  An  apparent  exception  to  this  is  where  a 
bill  is  drawn  upon  the  partnership  in  its  firm  name,  and 
accepted  by  one  of  the  partners  in  his  own  name ;  it  will 
still  bind  the  firm,  the  acceptance  being  legally  understood 
to  be  according  to  the  terms  in  which  it  is  drawn.  Where 
the  firm  name  is  that  of  one  of  the  partners,  a  bill  or  note 
negotiated  in  his  name  j^rijnafiacie  binds  him  individually, 
but  extrinsic  evidence  may  be  adduced  to  show  that  it  was 
made  in  the  firm  business,  and  taken  as  paper  of  the  firm. 

§  43.  Tlie  rule  requkes  such  paper  to  be  negotiated  not 


THIRD   PEESON   MUST   DEAL   IN    GOOD   FATrn.  23 

only  m  the  name^\^t  also  on  hehalf  of  the  firm.  Ilence, 
■where  the  business  of  the  firm  does  not,  in  its  transactions, 
require  the  agency  of  such  paper,  there  is  no  implied  au- 
thority to  issue  it,  and  the  firm  will  not  be  bound  by  it.  As 
illustrations  of  this,  we  may  take  partnerships  entered  into 
for  farming  or  mining  purposes,  or  for  those  that  are  profes- 
sional, as  medical  or  law  firms.  But  in  all  these  cases,  the 
presumption  against  the  implied  authority  may  be  rebutted, 
by  showing  either  that  the  constitution  and  particular  pur- 
poses of  the  firm  are  such  as  to  render  it  in  their  individual 
cases  necessary  ;  or  that,  though  not  necessary,  it  is  in  other 
similar  cases  usual. 

§  44.  Another  limitation  embraced  in  the  rule  is,  that 
the  tJurd  2J(^^"Son  who  deals  with  the  partner  on  the  behalf 
of  his  firm  must  deal  in  good  faith.  If  he  either  knew 
that  the  partner  was  not  authorised,  or  had  good  reason  to 
doubt  his  authority  to  bind  the  firm,  he  can  hold  only  the 
partner  contracting,  not  the  other  members.  Negotiable 
instruments,  although  given  in  the  finii  name,  cannot  be 
enforced  against  it  by  any  party,  who  is  guilty  of  fraud  in 
receiving  them,  or  who  took  them  knowing  that  they  had 
been  so  fraudulently  received,  or  even  without  knowing  it, 
unless  he  gave  for  them  a  valuable  consideration.  It  is 
not  usually  the  business  of  a  firm  to  guarantee  the  debts  of 
others  by  endorsement  or  otherwise ;  and  hence  all  such 
endorsements,  although  in  the  name  of  the  firm,  arc  void, 
unless  in  the  hands  of  a  honafide  holder. 

§  45.  One  partner  cannot  bind  the  firm  by  a  submission 
to  arbitration.  But  he  may  pledge,  as  well  as  sell,  the 
partnership  efi'ects.  lie  may  give  or  receive  notice  for  the 
firm.  He  may  render  it  liable  for  fraudulent  acts,  if  done 
in  the  prosecution,  and  within  the  scope,  of  its  regular 
business.  So  also  an  acknowledgment  of  a  debt  by  one 
partner  and  a  promise  to  pay  it,  if  donO  during  the  con- 
tinuance of  the  partnership,  is  equally  as  effectual  to  take 
a  debt  out  of  the  statute  of  limitations  as  if  done  by  all 


24  DEBTS   AGAINST   THE   PARTNERSHIP. 

the  firm.  But  in  most  of  t]ie  States  tUis  po'W'cr  ceases  with 
the  partnership,  on  tlic  ground  that  no  power  to  create  any- 
new  riglit  agamst  the  partnership  can,  after  its  dissolution, 
be  exercised  by  any  partner.  Bell  v.  Morrison,  1  Peters, 
351.      Van  Keuren  v.  Parmelee,  2  Comst.  623. 

§  46.  The  right  given  to  third  persons  by  the  valid 
creation  of  a  debt  against  the  partnership  is  hoth  joint 
and  several.  Not  only  is  the  partnership  stock  and  effects 
liable  to  be  applied  to  its  payment,  but  each  paitner 
is  also  liable  to  have  all  his  own  separate  property  applied 
W  ttfe^samc  purpose.  The  insolvency  of  the  firm,  or  of 
one  of  the  partners,  may,  therefore,  give  rise  to  conflicting 
claims  between  creditors.  This  conflict  equity  adjusts 
by  applying  the  partnership  property  to  the  payment  of 
the  partnership  debts,  and  the  separate  property  of  the 
partner  to  that  of  his  individual  debts.  Before,  therefore,  a 
partnership  creditor  can  reach  and  apply  the  separate  prop- 
erty of  the  partner  to  the  payment  of  his  debt,  he  must 
first  exhaust  that  of  the  partnership  ;  after  which  he  is 
entitled  to  have  applied  towards  its  satisfaction  any  surplus 
of  property  of  the  partner  remaining  after  his  itidividual 
debts  are  all  paid.  So  also  in  the  carrying  out  of  this  princi- 
ple, a  judgment  obtained  against  a  partner  upon  his  indi- 
vidual debt,  and  execution  issued  thereon,  will  first  be  levied 
upon  the  separate  property  of  the  partner,  and  next  a  sale 
may  be  made  under  it  of  the  partner's  interest  in  the  part- 
nership property,  that  interest  being  what  remains  as  his 
share  upon  distribution  of  the  partnership  property  after 
the  payment  of  all  the  partnership  debts.  3  Kent^s 
Comni.  65.    * 

QUESTIONS. 

"What  is  the  general  mle  as  to  the  right  of  each  partner  to  hind  the 
firm  ?  How,  -where  two  firms  have  each  a  common  partner,  and  a  com- 
mon name?  •  "What  limitation  as  to  the  mode  of  binding?  Ilo-wbydeed 
or  seal  ?  "What  exception  ?  "What  limitation  or  modification  ?  "What 
limitation  as  to  partnership  business  ?    "What  presumption  as  to  those 


now   A   PARTNERSHIP   MAT   BE   DISSOLVED.  25 

dealing  with  the  firm  ?  "What  the  rule,  where  partner  has  acted  in  fraud 
of  his  co-partners  ?  "What  the  illustration  ?  Wherein  is  found  the  most 
dangerous  exercise  of  power  by  ou^  partner  as  regards  the  firm  ?  How 
must  negotiable  paper  be  executed  to  bind  the  firm  ?  What  apparent 
exception  ?  What  rule,  where  the  firm  name  is  that  of  one  of  the  part- 
ners ?  What,  besides  the  firm  name,  is  necessary  to  hqjd  the  firm  on 
negotiable  paper?  What  illustrations?  How  presumption  rebutted? 
How  must  third  person  deal  to  hold  the  partnership?  When  is  the 
partner,  and  not  the  partnership,  holden  ?  When  is  negotiable  paper  in 
firm  name  not  enforceable  against  it  ?  What  is  the  firm  liability  on  the 
guaranty  of  another's  debt  ?  What  is  firm  liability,  on  submission  by 
partner  to  arbitration ?  On  pledge?  Notice?  Fraudulent  ac^s ?  Ac- 
knowledgment of  debt  and  promise  to  pay  ?  How,  after  dissolution  of  . 
partnership  ?  What  right  is  given  to  third  persons  by  partnership  debt 
in  their  favor?  What  may  give  rise  to  conflict  between  creditors? 
How  adjusted  by  equity  ?  How  partnership  projjerty  first  applied  ? 
How  separate  ?  What  the  rights  respectively  of  partnership  and  indi- 
vidual creditors  in  equity  ? 


PART  YI. 
DISSOLrilOX — ITS   CAUSES.      ITS   COXSEQCENCES.      WHEN  COMPLETE. 

§  47.  A  partnership  may  be  dissolved 

1.  By  lapse  of  time,  as  agreed  upon  in  the  contract. 

2.  By  completion  of  the  biisiuess  embraced  in  the  con- 
tract. 

3.  If  no  time  of  continuance  be  agreed  upon,  and  the 
business  has  no  natural  termination,  being  successive  in  its 
character  like  mercantile  pursuits,  it  is  then  a  partnership 
at  will,  and  either  one  of  the  partners  may,  in  a  moment, 
dissolve  it,  without  incurring  any  liability  to  the  others. 

4.  By  mutual  consent  of  the  parties. 

5.  By  insolvency  of  the  partnership  and  sale  of  its 
effects. 

6.  By  insolvency  of  one  of  the  partners  and  sale  under 
execution  of  his  interest  in  the  partnership  stock. 

7.  By  a  valid  assignment  by  one  partner  of  the  partner- 
ship effects,  or  of  his  own  separate  property  and  interest  in 
tlio  partnership  effects. 


26  CONSEQUENCES   OF   DISSOLUTION. 

8.  By  the  dcatli  of  either  one  of  the  partners. 

9.  By  the  iMarriage  of  a,  feme  sole  partner. 

10.  By  the  vohmtary  act  of  either  partner.  It  has  been 
made  a  question,  whether  one  partner,  against  the  will  of 
the  others,  can  dissolve  the  partnership  connection  before 
the  time  specified  in  the  articles  has  arrived.  It  is  now 
very  well  settled  that  he  may  do  so,  as  it  may  be  his  only 
means  of  escaping  utter  ruin ;  but  he  does  so  at  the  risk 
of  subjecting  himself  to  the  pa^mient  of  all  the  damages 
his  co-partners  may  sustain  as  a  direct  consequence  of  the 
exercise  of  this  right. 

11.  By  a  judicial  decree  of  the  court  of  chancery.  This 
will  only  be  upon  sufficient  cause  shown,  and  that  sufficiency 
must  in  many  cases  rest  in  the  sound  discretion  of  the  court. 
The  following  are  some  of  the  causes  : 

1.  When  the  business,  for  wliich  it  was  created,  is  foimd 
to  be  impracticable,  and  the  partnership  projDerty  is  liable 
to  be  wasted  and  lost. 

2.  "When  the  whole  scheme  of  the  association  is  found 
to  be  visionary,  or  founded  on  erroneous  principles. 

3.  When  the  insanity  of  a  partner,  or  his  habitual 
drunkenness  or  other  vices,  render  it  impracticable  to  carry 
on  the  business. 

4.  Where  the  conduct  of  one  partner  is  so  grossly  im- 
proper as  to  amount  to  an  exclusion  of  his  copartners  from 
their  proper  agency  in  the  firm,  or  such  as  renders  it  impos- 
sible to  carry  on  the  business  according  to  the  stipulated 
terms. 

§  48.  As  between  the  partners,  the  immediate  conse- 
quence of  dissolution  is  the  cessation  of  the  power  of  one 
partner  to  bind  the  firm  by  his  acts.  The  relations  between 
the  partners  and  the  nature  of  their  interest  in  the  joint 
stock,  are  at  once  changed.  From  joint  tenants  they  become 
tenants-in-common,  having  only  an  undivided  interest  in 
the  partnership  stock,  and  no  power  even  to  control  that 
interest  except  subject  to  the  partnership  rights.     These 


DISSOLUTION 'THEOUGH   A   PAETNEk's   DEATH.  27 

riglits  are  first  to  have  the  partnership  effects  applied  to  the 
payment  of  the  partnership  debts,  and  the  balance  distrib- 
uted among  the  partners,  according  to  their  respective  in- 
terests and  claims.  The  partnership  may  be  said,  in  a  quali- 
fied sense,  to  continue  until  its  prior  concerns  are  all  wound 
up,  but  no  partner  has  the  poM'er  of  imposing  new  obliga- 
tions upon  the  firm,  or  of  varying  the  form  or  character  of 
those  already  existing.  Even  negotiable  paper  endorsed 
before  the  dissolution,  cannot  afterwards  be  put  into  cir- 
culation so  as  to  bind  the  firm  without  the  concurrence  of 
all  its  members.  The  qualification  exists  solely  in  reference 
to  the  winding  up  of  its  concerns,  and  to  the  interest  of 
each  partner  as  tenant-in-common  ;  and  is  illustrated  in  the 
fact  that  the  law  permits  each  solvent  partner  to  collect  the 
outstanding  debts  due  to  the  firm,  adjust  the  unliquidated 
accounts,  and  give  the  necessary  receipts  and  discharges  to 
the  debtors  on  payment. 

§  49.  When  the  dissolution  occurs  through  the  death  of 
one  of  the  partners,  the  personal  representatives  of  the  de- 
ceased partner  become  tenauts-in-common  with  the  survivor ; 
but  the  survivor  being  alone  liable  at  law  to  the  partnership 
creditors,  is  entitled  to  the  possession  and  distribution  of 
the  assets,  to  enable  him  to  meet  that  liability.  If,  however, 
the  partnership  creditor  is  unable  to  realize  his  debt  against 
the  surviving  partner,  equity  will  enable  him  to  accomplish 
that  object  by  proceeding  against  the  estate  of  the  deceased 
partner,  if  the  same  be  solvent ;  as  equity  regards  the  obli- 
gations of  the  partners  as  being  several  as  well  as  joint. 
Tlie  English  rule  even  permits  this  resort  to  the  estate  of 
the  deceased  partner,  before  exhausting  the  remedy  against 
the  survivor,  but  in  this  country,  and  in  New  York  espe- 
cially, this  rule  is  repudiated.  Lawrence  v.  Trustees^  cCr., 
2  Denio^  577. 

§  50.  One  direct  consequence  of  the  dissolution,  is  tlie 
necessity  imposed  by  it  of  taking  prompt  and  effectual  steps 
to  wind  up  all  the  partnership  concerns.     With  this  view 


28  NOTICE   OF   DISSOLUTION. 

some  disposition  must  be  made  of  tlie  partnership  effects. 
K  the  partncrsliip  agreement  had  provided  that  the  effects  on 
hand  at  its  dissohition  should  be  taken  by  one  of  the  part- 
ners at  a  vahiation  according  to  a  prescribed  mode,  then 
the  business  might  go  on  without  any  interniption ;  and  this, 
more  especially  in  the  case  of  manufacturing  establislmients, 
might  be  a  matter  of  great  convenience.  But  if  the  agree- 
ment contains  no  such  provision,  and  the  partners  can  make 
no  arrangement  between  themselves,  neither  law  nor  equity 
lias  any  other  possible  mode  of  disposing  of  the  property 
than  by  a  public  sale  to  the  highest  bidder,  and  a  distribu- 
tion of  the  proceeds  as  before  indicated. 

§  51.  The  dissolution  of  a  jiartnership,  as  regards  its 
own  members  and  the  public,  comes  under  different  pi-inci- 
ples.  So  far  as  concerns  its  own  members,  it  may  be  im- 
mediate and  effectual,  but  in  reference  to  the  public,  the 
element  of  notice  comes  in  for  consideration.  The  inquiry, 
therefore,  becomes  important,  in  what  cases,  and  hoio,  notice 
may  be  so  given  as  to  render  the  (Jissohdion  complete,  and 
thus  prevent  one  partner  from  having  the  right  of  continu- 
ing to  pledge  the  liability  of  the  jB.rm.  In  several  of  the 
modes  of  dissolution  mentioned,  a  firm  may  be  bound,  not- 
withstanding,its  dissolution,  by  a  contract  made  by  one  part- 
ner in  the  usual  course  of  business,  and  in  the  name  of  the 
firm,  with  a  person  who  contracted  on  the  faith  of  the  part- 
nership, having  had  no  notice  of  its  dissolution. 

§  52.  "Wlien  a  single  partner,  other  than  a  dormant  one, 
retires  from  the  firm,  he  must  see  that  the  requisite  notice 
is  given,  or  his  partnership  liability  will  still  continue.  The 
continued  use  of  the  old  partnership  name,  with  his  assent, 
win  continue  his  liability  notwithstanding  notice.  But  such 
use,  without  his  knowledge  or  assent,  would  not  render  him 
liable,  as  persons  dealing  with  the  firm  are  bound  to  inquire 
who  constitute  it.  A  dormant  partner  may  withdi'aw  with- 
out giving  public  notice. 

§  53.  When  a  partnership  expires  bj  its  own  limitation, 


MODE   OF   GmXG   NOTICE.  29 

or  is  dissolved  by  operation  of  law,  no  public  notice  is 
necessary.  It  is  then  a  fact  of  wLdch  tbe  public  are  bound 
to  take  notice. 

§  54.  It  was  once  made  a  question,  wbetlier,  in  case  of  a 
dissolution  occurring  by  the  death  of  one  of  the  partners,  a 
notice  is  necessary  to  prevent  the  continued  liability  of  the 
property  of  the  deceased  through  the  acts  of  his  surviving 
partners.  As  now  understood,  the  death  itself  is  sufficient 
public  notice,  and  no  other  is  required. 

§  55.  A  partner,  by  his  own  act,  dissolving  the  partner- 
ship, or  retiring  from  it,  to  avoid  partnersliip  liability  in  the 
future,  should  immediately  give  notice  in  two  different  modes : 

1.  He  should  publish  a  notice  of  dissolution  in  one  of 
the  usual  advertising  newspapers  of  the  place  where  the 
business  was  carried  on.  That  is  sufficient  as  to  all  those 
who  have  not  had  previous  dealings  with  the  firm. 

2.  As  to  all  those  who  have  had  such  previous  dealings, 
actual  notice  should  be  given  to  them  of  the  dissolution. 
By  these  means  the  dissolution  may  be  rendered  complete 
as  to  the  immediate  parties  and  also  to  the  public. 

QUESTIOXS. 

"What  are  the  different  modes  by  which  a  partnership  may  be  dis- 
solved ?  "When  by  the  voluntary  act  of  the  partner  before  its  stipulated 
termination,  -what  risk  or  liability  is  incurred  ?  In  what  cases  may  it  be 
dissolved  by  judicial  decree  ?  What,  as  between  the  partners,  is  the 
consequence  of  dissolution  ?  In  what  sense  may  the  partnership  be  said 
to  continue  after  dissolution  ?  For  what  purpose  may  it  so  continue  ? 
What  may  each  solvent  partner  do  after  dissolution  ?  "What  may  he  not 
do  ?  When  the  dissolution  occurs  by  the  death  of  a  partner,  what  are 
the  relations  of  Jiis  personal  representatives  with  the  survi\-ing  partner? 
What  are  the  surviving  partner's  liabilities,  and  what  is  he  entitled  to  ? 
What  remedy  does  equity  give,  and  why  ?  How  may  the  partnership 
concerns  be  wound  up  ?  How,  if  wound  up  by  the  law  ?  What  must  a 
rctu-ing  partner  do,  to  escape  future  liability  ?  How  in  case  of  a  dor- 
mant partner  ?  What  rule,  when  partnersliip  expires  by  its  own  limita- 
tion ?  What,  when  by  the  death  of  a  partner  ?  What  are  the  modes  of 
giving  notice  when  a  partner  retires,  or  by  his  own  act  dissolves  the 
partnership  ? 


30       C0KP0KATI0N8 — ^WUAT,  AND  HOW  CREATED. 

CHAPTER  III. 

CORPORATIONS   AS    COMMERCIAL   PERSONS. 

The  immense  amoiint  of  property  now  embarked  in 
Banking,  Insurance,  Mannfacturing,  and  Kailroad  Coi-pora- 
tions,  gives  an  importance  to  this  subject  scarcely  inferior  to 
any  other  at  the  present  day.  But  as  corporations  aggregate 
only  possess  a  mercantile  character,  the  attention  will  be 
limited  entirely  to  them. 

PART  I. 

WHAT  THEY   AEE,  AlfD  HOW   OEEATED. 

§  56.  A  corporation  aggregate  consists  of  a  franchise, 
or  special  right  or  rights,  possessed  by  several  individuals, 
who  subsist  as  a  body  politic,  under  a  special  denomination, 
and  are  vested  with  the  capacity  of  perpetual  succession,  and 
of  acting  in  many  respects  as  a  single  individual.  It  is 
peculiarly  a  creature  of  the  law,  existing  only  in  legal  con- 
templation, and  deriving  from  its  policy  not  only  its  being, 
but  all  its  powers  and  capacities.  The  object  contemplated 
is  to  bring  vast  amounts  of  capital,  for  purposes  more 
gigantic  than  individual  ^  enterprise  could  hope  to  ac- 
complish, under  the  dominion  of  an  entity  created  and 
controlled  by  the  law.  It  is  said  to  be  immortal,  invisible, 
and  intangible  ;  but  its  immortality  means  only  its  capa- 
city to  take  in  perpetual  succession  so  long  as  the  corpora- 
tion exists. 

§  57.  Although  it  may  be  competent  for  coi'porations 
to  exist  in  this  country  by  prescription,  which  presupposes 
a  grant,  yet  almost  the  only  mode  by  which  they  are  created 
is  by  legislative  act.  Tlie  power  thus  to  create  is  possessed 
and  exercised  by  both  the  state  and  federal  legislatures. 
It  is  exercised  by  a  grant,  and  embodied  in  the  charter,  but 


POWERS   OF   C0KP0KATI0N8.  31 

this  requires  an  acceptance  in  order  to  create  a  corporate 
body.  This  may,  however,  be  inferred  from  the  acts  of  the 
majority  of  the  corporators — the  persons  receiving  the 
charter, — thus  dispensing  with  a  written  instrument,  or 
even  vote  of  acceptance.  The  charter  once  accepted  is  re- 
garded as  a  contract  between  the  State  and  the  corporators. 
Trustees  of  Dartmouth  College  v.  Woodward,  4  Wheat.  518. 
It  is  from  this  standpoint  that  the  rights  of  corporations  are 
shaped,  and  their  freedom  from  subsequent  legislation 
derived.  Iso  legislation  can  impair  the  obligation  of  con- 
tracts ;  and  hence,  unless  the  right  is  reserved  in  the  charter, 
corporations,  once  created,  are  independent  of  the  legis- 
lature. This  has  led  very  generally  to  the  introduction  of 
a  provision  into  the  act  of  incorporation  giving  the  right  to 
alter,  amend,  or  repeal  the  act  at  pleasure.  The  practice  is 
now  becoming  quite  common  in  many  States  of  passing 
general  acts  of  incorporation,  under  which  companies  may 
organize,  and  thus  derive  all  the  benefits  of  an  incorpora- 
tion without  the  necessity  of  special  legislation.  In  this 
way  all  banking  and  manufacturing  corporations  are  now 
formed  in  !New  York. 

QUESTIONS. 

What  is  a  corporation  aggregate  ?  What  the  object  contemplated  in 
its  creation  ?  Wliat  its  qualities  ?  What  the  mode  of  its  creation  ? 
What  the  instrument  by  which  it  is  created  ?  What  necessary  to  render 
the  charter  a  valid  act  of  incorporation  ?  How  may  acceptance  be  in- 
ferred ?  How  is  a  charter  accepted  regarded  ?  How  may  the  legislature 
change  charters  once  granted  ?  What  the  means  generally  resorted  to 
that  may  reserve  this  power?  How  are  banking  and  manufacturing 
companies  formed  ? 

PART  II. 

THBIR  POWERS   AND  LIABILrnES. 

§  58,  Tlic  powers  possessed  by  corporations  have  been 
briefly  summed  up  in  the  "  capacity  to  have  perpetual  suc- 
cession, under  a  special  denomination,  and  an  artificial  form, 


32  QUASI   eOKPOKATIONS. 

and  to  take  and  grant  property,  contract  obligations,  and  sue 
and  be  sued  by  its  corporate  name,  and  to  receive  and  enjoy, 
in  common,  grants  of  privileges  and  immunities."  The 
inquiries  that  a  business  man  is  chiefly  interested  in  making, 
concerns  the  organization  and  exercise  of  the  power  by 
which  corporate  action  is  directed  and  controlled  ;  the  con- 
tracts they  are  capable  of  making  and  how  they  may  be 
evidenced  ;  and  the  limits  and  extent  of  corporate  liability. 
There  are  many  kinds  of  corporations  of  which  he  needs 
to  know  little.  The  only  two  that  will  be  likely  to  engage 
his  attention  in  the  way  of  business  are  those  organized  for 
governmental  purposes  and  stock  corporations. 

§  69.  The  governmental,  or  first  mentioned,  are  gene- 
rally termed  quasi  coi'porations,  and  possess  a  corporate 
capacity  only  for  particular,  specified  ends  ;  but  whose 
corporate  powers  are  perfect  for  all  the  pur[30ses  of  accom- 
plishing those  ends.  These  are  of  statutory  creation,  and 
in  New  York  their  illustrations  may  be  found  in  the  differ- 
ent counties  in  the  state,  the  suj^ervisors  of  a  county,  the 
supervisors  of  towns,  overseers  of  the  poor,  trustees  of 
school  districts,  and  several  others  of  a  similar  character: 
who  may  hold  and  transmit  public  property,  and  do  many 
corporate  acts,  having  corresponding  corporate  powers  and 
attributes.  Each  one  of  these  several  bodies  of  men  may 
sue  and  be  sued  in  their  corporate  capacity.  Both  towns 
and  counties  generally  through  this  country  are  bodies 
politic  for  certain  pm-poses ;  and  these,  and  others  of  a 
similar  character,  possess  sufficient  corporate  powers  to 
answer  all  the  purposes  for  which  they  exist,  without  having, 
in  any  other  respect,  the  capacities  incident  to  a  corporation. 

§  60.  The  stock  corporations,  in  vastness  and  importance, 
overshadow  every  other.  Such  are  banking,  insurance, 
manufactoring,  turnpike,  bridge,  and  railroad  companies. 
All  such  are  creatures  of  the  legislature,  and  though  private 
as  to  ownership  and  control,  are  nevertheless  incidentally 
public,  as  affording  facilities  not  otherways  to  be  enjoyed. 


STOCK   COEPOEATIONS.  33 

§  61.  In  all  corporations  of  tliis  character  the  important 
point  of  inquiry  is — What  are  the  rights,  powers,  and  lia- 
bilities contained  in  the  charter?  The  charter  is  to  the 
corporation,  what  the  constitution  is  to  a  State — its  funda- 
mental law.  The  same  rule  of  construction  is  adopted  in 
both  cases,  viz.,  that  no  other  powers  can  be  exercised  by 
the  legislature  in  the  one  case  and  the  coq^orators  in  the 
other,  than  those  which  are  either  expressly  delegated,  or 
which  are  necessary  to  carry  into  effect  those  which  are  so 
delegated. 

§  62.  The  rule  in  regard  to  these  powers  is  that  they 
shall  be  construed  strictly.  A  corporation  is  bound  to  show 
its  authority  for  the  business  it  assumes  to  do.  Its  powers 
are  also  confined  to  the  jurisdiction  creating  it,  and  hence 
where  one  State  authorized  the  erection  of  a  bridge,  one 
end  of  which  extended  into  another  State,  the  corporation 
could  not  collect  toll  of  those  who  passed  only  the  part  of 
the  bridge  situa,ted  in  the  other  State.  Middle  Bridge 
Corporation  v.  MarTts,  26  Maine,  326.  Tlie  acts  of  corpo- 
ration agents  are  also  subject  to  the  same  rule,  and  hence  a 
deed  signed  by  the  president  and  cashier,  and  sealed  with 
the  corporate  seal,  was  held  of  no  effect,  if  affixed  without 
the  authority  of  the  directors.  Hoyt  v.  Thorn2)son,  1  Sdd. 
321.  So  also  corporations  cannot  bind  themselves  for  pur- 
poses foreign  to  those  for  which  they  were  established  ;  and 
although  one  created  for  the  pui-poses  of  trade  may  exercise 
as  incidental,  the  power  to  accept  bills  and  issue  notes,  yet 
it  may  l>e  well  doubted  whether  one  for  a  mining,  or  any 
other  purpose,  not  of  trade,  possesses  any  such  power. 

§  63.  The  power  of  making  by-laws  is  incidental  to  a 
corporation.  TLiey  may  be  made  either  by  the  coi^iorators, 
or  any  lesser  body  to  whom  they  may  delegate  the  power, 
unless  the  charter  contain  specific  directions.  The  charter 
usually  vests  it  in  the  board  of  directors.  Tlie  by-law  is 
to  the  cor^Doration  what  legislation  is  to  the  State.  The  rules 
in  relation  to  it  are — 
3 


34  BOARD   OF   DIEECTOKS. 

1.  It  must  be  reasonable.  ' 

2.  Strictly  witliin  the  limits  of  the  charter. 

3.  In  subordination  to  the  constitution  and  general  law 
of  the  land. 

§  64.  In  cases  within  its  chartered  powers,  it  is  the  act 
of  the  majority  that  binds  the  whole ;  that  majority  being 
the  major  part  of  those  who  are  present  at  a  regular  corpo- 
rate meeting.  "Where,  however,  the  act  is  to  be  done  by  a 
definite  body  as  a  board  of  directors,  a  majority  of  the 
board  must  be  present,  and  then  the  ultimate  decision  may 
rest  npon  a  majority  of  the  quorum.  Although  in  joint 
stock  corporations  it  is  competent  to  remove  an  officer  upon 
sufficient  cause  shown,  yet  no  stockholder  can  be  disfran- 
chised by  any  act  of  the  corporators,  without  at  least  an 
express  authority  contained  in  the  charter,  as  that  would 
deprive  him  of  his  interest  in  the  general  fund. 

§  65.  In  all  joint  stock  corporations  the  board  of  direc- 
tors, for  all  business  purposes,  is  the  corporation ;  and 
hence  its  acts  in  reference  to  the  corporate  property  and 
corporate  transactions  are  taken  as  corporate  acts.  The 
stockholders,  who  are  the  corporators,  elect  the  directors, 
and  then  the  law  devolves  the  business  to  be  done  upon 
the  board.  Tliis  business  cannot  be  done  by  the  directors 
acting  separately  and  individually.  It  is  the  board  regularly 
assembled,  and  having  present  its  quorum ;  and  then  only 
can  its  act  be  that  of  the  corporation.  A  conveyance  exe- 
cuted under  the  hands  and  seals  of  the  directors  or  trustees, 
would  not  convey  the  property  of  the  corporation.  To  do 
that,  it  should  be  executed  in  the  coi'porate  name,  and  have 
affixed  to  it  the  corporate  seal  by  the  president  or  other 
officer  authorized  to  do  it. 

§  G6.  Another  important  inquiry  relates  to  the  powers 
of  joint  stock  corporations  in  the  making  of  contracts — the 
character  of  contract  they  are  authorized  to  make,  the  mode 
or  manner  of  making  it,  and  how  it  may  be  evidenced. 
One   question  of  great  importance  has   been  raised   and 


POWER  TO   MAKE   CONTKACTS.  3& 

settled  in  this  country  ;  and  tliat  is,  whetlier  a  corporation 
has  a  legal  existence,  for  any  purpose,  out  of  the  boundaries 
of  the  sovereignty  by  wliich  it  was  established,  and  hence 
whether  a  contract  made  in  another  State  was  enforceable 
by  the  laws  of  that  State.  It  was  held  that  a  contract  thus 
made,  was  valid  and  enforceable,  provided  it  was  authorized 
by  the  charter,  and  permitted  by  the  laws  of  the  State  in 
which  it  was  made.  Bank  of  Augusta  v.  Earle,  13 
Peters,  519. 

§  67.  A  corporation  can  make  no  contract  which  will 
apply  its  funds  to  any  other  objects  than  those  specified  or 
plainly  implied  in  its  charter ;  and  hence  where  two  Rail- 
road companies,  without  legislative  authority,  uniting  by 
agreement,  bought  a  steamer  as  part  of  the  plan,  giving  a 
note  as  by  the  new  company  thus  formed,  both  that  and  the 
whole  contract  were  adjudged  illegal  and  void.  Pearce 
v.  Madison  &  Indianapolis  Railroad  Co.  &c.,  21  Howard, 
441.  The  tendency,  however,  has,  for  a  long  time  been, 
and  still  is,  to  hold  corporations  liable  for  transactions  and 
liabilities  incurred  beyond  the  powers  expressly  granted  in 
the  charter,  provided  they  could,  by  any  reasonable  intend- 
ment, be  brought  within  the  implied  powers,  or  those  inci- 
dental to  the  express  ones ;  and  hence  the  powci-  to  make 
loans  and  receive  securities  therefor,  and  to  issue  negotiable 
paper  creating  a  liability  thereon,  has  been  recognized  by 
the  courts. 

§  68.  The  early  common  law  doctrine  was,  that  corpora- 
tions could  contract  only  through  their  common  seal,  which 
was  received  as  the  only  evidence  of  their  assent.  Progress 
in  the  mercantile  world  soon  rendered  the  strict  observance 
of  tliis  rule  impossible,  and  it  became  so  far  relaxed,  tliat  a 
corporation  was  permitted,  by  a  mere  vote,  to  appoint  an 
agent,  whose  acts  and  contracts  within  the  limits  of  his 
authority,  would  be  binding.  At  last  in  this  country  the 
old  technical  rule  was  entirely  laid  aside  so  far  at  least  as 
related  to  corporations  created  by  statute,  the  business  of 


36  BY   WHAT   ARE   C0EP0KATI0N8   BOUND  ? 

which  was  to  be  transacted  by  a  board  of  directors.  In  its 
place  was  adopted  the  sounder  and  better  rule,  that  "  when- 
ever a  corporation  aggregate  w^as  acting  within  the  range  of 
the  legitimate  purpose  of  its  institution,  all  parol  or  verbal 
contracts,  made  by  its  authorized  agents,  were  express  and 
binding  promises  of  the  corporation ;  and  all  duties  imposed 
upon  them  by  law,  and  all  benefits  conferred  at  theii*  request, 
raised  implied  promises,  for  the  enforcement  of  which  an 
action  lay."  2  Keiifs  Com.  289.  Corporations  may  now 
bind  themselves  by  implied  as  well  as  express  contracts,  and 
by  such  as  may  be  deduced  inferentially  from  corporate 
acts,  without  either  vote,  or  seal,  or  deed,  or  writing. 

§  69.  K^either,  in  the  case  of  ordinary  contracts,  need 
the  agent  be  appointed  under  seal,  nor  even  by  vote  of  the 
corporation ;  but  his  acts,  as  agent,  known  to,  and  recog- 
nized by  the  board  as  such,  will  render  the  corporation 
liable  to  the  same  extent  as  if  there  had  been  a  regular 
formal  appointment. 

§  TO.  But  in  whatever  way  agents  may  be  appointed, 
or  however  evidenced  their  appointment  or  acts,  or  con- 
tracts, corporations  can  be  bound  only  by  such  as  are  done 
and  made  within  the  scope  of  their  authority.  This  applies 
not  only  to  the  agent,  but  also  to  the  powers  exercised  by 
the  corporation,  as  the  latter  cannot  be  made  liable  for  the 
acts  of  its  agents,  which  are  clearly  not  within  its  corporate 
powers,  although  they  may  be  ratified  by  the  directors. 

§  71.  Corporations  are  generally  held  liable  for  the 
negligence  and  unskiKulness  of  then*  agents  in  all  mattera 
coming  legitimately  within  the  scope  of  their  powers.  But 
a  different  rule  prevails  where  such  matters  are  without 
their  powers  ;  and  hence  where  a  bridge  was  so  negligently 
constructed  by  the  agents  of  a  municipal  corporation  that 
it  fell  and  injured  the  plaintiff,  it  was  held  that  he  had  no 
remedy  against  the  corporation,  the  act  under  which  it  was 
erected  being  unconstitutional.  The  Mayor,  (Jjc,  of  Alhany 
V.  Cunliff,  2  CoDist  165. 


LIABILITY  FOB  AGENt's  ACTS.  37 

§  72.  Another  limitation  of  tlie  liability  of  corporations 
relates  to  the  agent's  acts.  They  are  not  liable  for  such  as 
are  wilful  and  intentional  on  the  part  of  the  agent.  And 
this  rule  embraces  acts  of  such  a  nature  that  they  might, 
under  other  circumstances,  come  within  the  scope  of  their 
powers  and  agency,  and  thus  admit  of  lawful  perfonnance. 
The  fraudulent  issue  of  stock  of  a  railroad  corporation  by 
its  president  and  transfer  agent,  and  coming  by  assignment 
into  the  hands  of  an  innocent  party,  is  void  as  against  the 
corporation.  Mechanics  Bank  v.  N.  Y.  &  N.  If.  R.  H., 
3  Kern,  699. 

QUESTIO!n"S. 

How  may  the  powers  of  a  corporation  be  summed  np  ?  Wiat  in-, 
quiries  should  a  business  man  make  ?  "What  two  kinds  of  corporations 
are  important  for  him  to  understand  ?  What  are  governmental  or  quasi 
corporations  ?  How  created  ?  What  illustrations  ?  AVhat  the  measure 
of  their  powers?  What  are  instances  of  stock  corporations?  How 
created  ?  How  as  to  being  private  or  public  ?  What  is  here  the  im- 
portant point  of  inquiry  ?  What  is  the  charter,  and  to  what  analo- 
gous ?  What  is  the  rule  of  construction  ?  How  construed  ?  To  what 
are  its  powers  confined  ?  How  with  corporation  agents  ?  What  limi- 
tation as  to  purposes  for  which  they  are  created  ?  What  is  a  by-law, 
by  what  power  made,  and  what  are  the  rules  that  regulate  it  ?  The  act 
of  what  binds  within  chartered  powers  ?  What  in  a  board  of  directors  ? 
How  as  to  removal  of  officer?  As  to  disfranchisement  of  member? 
How  board  of  directors  regarded  in  joint  stock  corporations  ?  How 
their  acts  ?  Who  are  the  corporators,  and  what  do  they  do  ?  When 
are  the  acts  of  the  board  those  of  the  corporation  ?  How  must  convey- 
ance be  executed  to  bind  corporation  ?  Is  a  contract  made  by  a  corpo- 
ration in  a  State  other  than  that  creating  it  enforceable  where  made, 
and  subject  to  what  provisos  ?  What  is  the  limitation  as  to  application 
of  fund  ?  What  illustration  ?  What  is  the  present  tendency  ?  How 
effected?  What  instances?  What  was  once  the  only  mode  of  con- 
tracting ?  In  what  was  the  first  relaxation  of  the  riile  ?  What  is  the 
present  rule  in  this  country  ?  What  kind  of  contracts  may  corporations 
now  make  ?  How  may  the  agent  be  appointed  in  ordinary  contracts  ? 
What  limitation  as  to  acts  of  agents  however  appointed  ?  What  appli- 
cations? What  liability  for  negligence  and  imskilfulness  of  agents? 
For  what  matters  liable  ?  For  what  not  liable  ?  What  other  limitation 
of  liability  ?    What  acts  embraced  ?    What  instance  in  illustration  ? 


38  DISSOLUTION   OF   COEPOEATIONS. 

PART  III. 

ITS   DI8S0LTTTI0N  AND  CONSEQUENCES. 

§  Y3.  Municipal  corporations,  such  as  towns,  connties, 
&c.,  which  have  been  created  for  the  purposes  of  govern- 
ment, are  subject  to  being  modified  or  dissolved  at  the 
pleasure  of  the  creating  power.  These  are  in  no  sense  a 
contract,  but  are  simply  the  acts  of  the  sovereign  power, 
and  in  this  direction  find  their  only  limit  in  the  discretion 
that  should  accompany  its  exercise.  Such  modification  or 
dissolution,  however,  cannot  afi'ect  any  vested  right  acquired 
during  its  continuance,  unless  the  exercise  of  such  right 
depend  solely  upon  such  continuance ;  as  in  case  of  the 
salary  of  an  ofiicer,  which,  being  dependent  upon  the  con- 
tinuance of  the  ofiice,  terminates  with  it. 

§  T4.  As  to  joint  stock  corporations,  they  being  contracts 
between  the  State  and  the  corporators,  cannot  be  modified 
or  dissolved  by  a  legislative  act  without  a  reservation  to 
that  efi'ect.     Such  corporations  may  be  dissolved — 

1.  By  a  voluntary  surrender  of  their  franchises  into  the 
hands  of  government,  and  an  acceptance  by  some  solemn 
act  of  the  government. 

2.  By  such  abuse  or  misuser  as  will  justify  a  forfeiture, 
and  a  judgment  of  forfeiture  consequent  thereon  pronounced 
by  a  competent  judicial  tribunal.  This  must  be  a  court  of 
law,  and  not  of  equity  ;  as  the  latter  only  enforces  trusts, 
but  never  pronounces  forfeitures. 

§  'TS.  As  to  what  acts  constitute  such  abuse  or  misuser, 
courts  have  taken  somewhat  different  views,  and  much  will 
depend  upon  the  particular  phraseology  of  the  statute  crea- 
ting the  corporation.  It  is  everywhere  admitted  that  it 
possesses  great  tenacity  of  life,  and  that  it  is  impossible  to  fix 
any  very  precise  limit,  which  shall  define  the  line  of  for- 
feiture. The  suspension,  for  instance,  of  specie  payment 
by  a  bank,  has  been  decided  both  that  it  was,  and  was  not, 


CONSEQUENCES   OF  DISSOLTmON.  39 

such  a  non-user,  or  mis-iiscr  of  its  franchises,  as  to  "^ork  a 
forfeiture  of  its  charter.  Tliat  it  would  v/ork  such  for- 
feiture see  Planters  Bank  of  Missusip2)l  v-  The  State., 
7  Smedes  i&  Marshall,  163.  That  it  would  not  have  that 
effect  see  The  /State  v.  The  Banh  of  South  Carolina, 
1  Speers,  433.  And  where  a  manufacturing  company  sold 
all  its  property  and  effects,  together  with  its  charter,  to  a 
partnership,  the  members  of  which  elected  themselves  trus- 
tees of  the  corporation,  it  was  held  no  dissolution  of  it. 
Wilde  V.  Jenkins,  4  Paige,  481.  But  where  the  statute 
provides  for  the  personal  liability  of  stockholders,  and  the 
trustees  or  directors  relinquish  their  trust,  omit  the  annual 
election,  and  do  nothing  indicating  a  resumption  of  corpo- 
rate functions,  courts  will  presume  a  dissolution  so  far  as 
creditors  are  concerned,  and  give  them  their  remedy  against 
the  individual  members.  2  Kenth  Coram'.,  811. 
^  §  YG.  Tlie  consequences  of  dissolution  by  the  old  com- 
mon law  were — that  its  real  estate  reverts  back  to  the 
original  grantor  and  his  heirs — that  the  debts,  to  and 
against,  arc  extinguished — and  that  all  the  personal  estate 
vests  in  the  people  as  succeeding  to  the  rights  of  the  govern- 
ment creating  it.  Since  the  creation  of  so  many  joint  stock 
and  money  corporations,  all  this  has  become  changed,  and 
the  sounder  doctrine  may  now  be  stated  to  be — "  that  the 
capital  and  debts  of  such  corporations  constitute  a  trust 
fund,  and  pledge  for  the  payment  of  creditors  and  stock- 
holders, and  a  court  of  equity  will  lay  hold  of  the  fund,  and 
sec  that  it  is  fully  collected  and  applied."  2  Kent^s  Comm., 
^th  Ed.,  375  Note  a.  Tlius  the  principle  applicable  to  the 
winding  up  of  such  corporations,  is  essentially  the  same  as 
that  which  applies  to  partnerships. 

QUESTIONS. 

How  aro  mnnicipal  corporations  modified  or  dissolved  ?  Why  ? 
What  is  the  limit  of  such  modification  or  dissolution  ?  What  the  pos- 
sible exception  and  its  illustration  ?    How  may  joint  stock  corporations 


40  AGKNCY — WHAT   18   IT? 

bo  dissolved  ?  By  wlmt  triltuiial  ?  On  what  dependent  ?  What  is  its 
tenacity  of  life?  Wliat  limit  difficult  to  fix?  What  illustrations? 
"What  the  old  common  law  conscfpiences  of  dissolution?  What  tho 
present  doctrine,  and  to  what  is  it  analogous? 


CHAPTER  IV. 

PRINCIPAL    AND    AGENT. 

The  principles  that  regulate  the  relations  of  principal 
and  agent,  both  as  between  each  other,  and  as  regards  each 
and  third  persons,  are  among  the  most  important  in  mercan- 
tile law.  The  number,  extent,  and  variety  of  mercantile 
pursuits  have  called  into  existence  this  branch  of  the  law, 
and  moulded  it  to  suit  the  requisitions,  exigencies,  and  neces- 
sities of  business.'  , 

PART  I. 

AGENCY  "WHAT — WHO    MAT  BE   AGEIIT,  AND  HOW  CREATED. 

§  77.  An  agency  is  the  substitution  of  one  for  another 
in  some  matter  of  business.  It  is  based  upon  a  contract, 
either  express  or  imj)lied,  by  which  one  confides  to  the 
other  the  management  of  some  business,  to  be  transacted 
either  in  his  name  or  on  his  account,  and  by  which  the 
other  assumes  to  do  the  business  and  to  render  an  account 
of  it.  In  general  whatever  a  man  has  the  power  to  do  in 
his  own  right,  he  may  appoint  an  agent  to  do  for  him.  The 
power,  therefore,  of  appointing  an  agent  is  generally  co- 
extensive with  the  capacity  to  do  business  on  the  part  of  the 
principal.  And,  if  that  capacity  is  limited,  as  in  the  infant 
and  married  woman,  the  power  of  creating  an  agent  expe- 
riences a  like  limitation. 

§  78.  So  far  as  regards  the  person  who  may  be  appointed 
agent,  the  rule  is  very  broad.  Many  of  those  who  are  in- 
capacitated from  doing  business  on  their  own  account,  as 


MODES  OF  CEEATING  AGENCIES.  41 

infants  and  married  women,  may  nevertheless  be  appointed 
agents.  The  act  being  in  law  tliat  of  tlie  principal,  no  mere 
disability  of  the  agent  is  attachable  to  it.  The  only  limita- 
tion here  is  confined  to  those  cases  where  nature  herself  has 
created  the  barrier — such  as  those  of  idiocy,  imbecility  and 
insanity.  But  in  contracts  requiring  the  exercise  of  dis- 
cretion, one  person  cannot  be  agent  for  both  parties,  as 
where  the  agent  of  one  insurance  company  reinsured 
another,  of  which  he  was  director  and  secretary,  acting  for 
both,  the  contract  was  held  voidable  m  equity.  J^eio  York 
Central  Insurance  Company  v.  New  York  <Jj  New  Haven 
Railroad  Company,  4  Kern,  85. 

§  79.  Tliere  are  various  modes  of  creating  an  agency. 
It  may  be  in  writing,  and  formally  under  seal,  as  by  a 
Power  of  Attorney  ;  or  by  informal  writings,  as  by  letter, 
instructions,  memoranda ;  or  it  may  be  verbal,  or  by  impli- 
cation. It  is  only  necessary  to  be  formal  and  under  seal 
where,  as  in  the  conveyance  of  land,  the  thing  to  be  done  must 
be  evidenced  by  an  instrument  thus  formal  and  sealed.  And 
even  here  the  authority  to  contract  need  not  be  in  writing, 
but  that  to  convey  must.  And  in  cases  where,  by  the  statute 
of  frauds,  the  sale  of  goods  must  be  in  wi'iting  in  order  to 
be  valid,  the  creating  of  an  agency  to  sell  may  be  verbal. 

§  80.  An  agency  in  mercantile  pursuits  is  often  created 
by  mere  implication,  the  authority  being  implied  either 
from  the  conduct  of  the  principal  in  sanctioning  the  credit 
given  to  a  person  acting  in  his  name,  or  from  the  nature  of 
the  employment  itself.  The  fact  of  employment  is  always 
evidence  of  authority  in  the  person  employed.  An  agent 
whose  employment  consists  in  buying  goods  for  his  principal 
with  ready  money,  cannot  subject  him  to  a  debt  by  buying 
on  credit;  but  if  his  employment  be  to  l)uy  on  credit, 
although  the  money  to  purchase  was  furnished  him,  yet  he 
may  misapply  that,  and  charge  his  principal  with  the 
credit  which  he  is  accustomed  to  obtain.  But  where  thcro 
has  been  no  previous  dealing  on  credit  sanctioned  by  the 


42  ADOPTION  OF  THE  AGENCY 

principal,  there  any  trust  given  by  a  party  is  at  his  peril, 
lie  can  then  only  look  to  the  agent.  Tliis  implied  authority 
continues  after  the  agency  has  actually  ceased,  unless  the 
parties  giving  credit  to  it  cither  had  notice  of  the  change, 
or  from  length  of  time  or  other  circumstances,  ought  not  to- 
have  infen'ed  that  it  continued. 

§  81.  An  agency  may  also  be  created  by  implying  an 
authority  from  subsequent  acts  of  assent  or  acquiescence  on 
the  part  of  the  principal.  A  contract  is  made  for  another 
\nthout  authority,  "Without  some  act  or  acquiescence  of 
that  other,  it  has  no  binding  force  upon  him.  But  if,  with 
a  full  knowledge  of  all  the  facts,  he  adopts  it,  he  then 
makes  it  his  own,  and  it  has  relation  back  to  the  time  at 
which  it  was  entered  into.  The  best  evidence  of  this  adop- 
tion is  his  availing  himself  of  any  benefit  resulting  from  it. 
This  adojition  of  the  agency  in  any  one  part,  with  full 
knowledge  of  the  circumstances,  operates  as  an  adoption  of 
the  whole  contract  or  act,  for  one  part  cannot  be  adopted, 
and  the  rest  repudiated. 

§  82.  This  adoption  may  also  be  accomplished  by  re- 
maining silent.  It  is  the  duty  of  such  a  principal,  when 
his  coiTCspondent  informs  him  of  an  act  done  for  him,  to 
express  his  dissent,  and  give  notice  within  a  reasonable  time, 
or  he  will  be  bound  by  it.  This,  however,  only  applies  where 
some  general  relations  of  agency  already  exist,  and  has 
nothing  to  do  with  the  officious  act  of  a  stranger,  which  can 
never  lay  the  party  for  whom  it  is  done  under  any  legal 
obligations,  without  some  voluntary  act  on  his  part  adopt- 
ing it. 

QUESTIONS. 

"What  is  an  agency,  and  npon  -what  based  ?  'What  may  a  man  ap- 
point an  agent  to  do  ?  What  is  the  limit  of  capacity  to  appoint  ?  Who 
may  he  appointed  ?  Whose  act  is  it  when  done  ?  Where  is  the  only 
limitation?  Wliat  rule  as  to  being  agent  for  both  parties?  What 
different  modes  of  creating  an  agency  ?  When  necessary  that  it  should 
be  formal  and  under  seal  ?    Wliat  difference  here  between  the  authority 


DirFEEE2TT  KIXDS   OF  AGENCY.  43 

to  contract  and  that  to  convey  ?  IIow  created  in  a  case  within  statute 
of  frauds  ?  How  is  an  agency  created  by  implication  ?  What  is  em- 
ployment evidence  of?  What  illustrations?  How  long  does  implied 
authority  continue  ?  How  implied  from  subsequent  acts  ?  What  neces- 
sary to  such  implication  ?  To  what  does  it  have  relation  ?  What  tho 
best  evidence  of  adoption?  What  eflfect  the  adoption  of  one  part? 
What  the  effect  of  remaining  silent  ?  What  is  the  duty  ot  the  principal? 
Where  does  this  apply,  and  where  not  ? 

PAKT  II. 

DirFEBENT  EIN-DS  OF  AGEKCT. 

§  83.  An  agency  is  either  Special  or  General.  A  Special 
consists  in  a  delegation  of  authority  to  do  a  single  act.  A 
General  is  such  delegation  to  do  all  acts  and  things  that  are 
connected  M'ith  a  particular  business  or  employment.  An- 
other division  is  into  Limited^  in  which  the  agent  is  bound 
by  precise  instructions,  and  Unlimited,  where  he  is  left  to 
pursue  his  own  discretion.  Tlie  first  applies  to  a  general 
agent,  limiting  and  restricting  his  authority  ;  the  second  to 
a  special  agent,  leaving  him  limitless  as  to  the  particular 
means  he  may  make  use  of  in  the  exercise  of  his  special 
authority. 

§  84.  Tliere  are  also  different  kinds  of  agents  having 
reference  particularly  to  commerce.  Tliese  are — the  Factor ^ 
who  is  an  agent  for  the  sale  of  property.  He  is,  there- 
fore, intrusted  with  the  possession.  And  also,  the  Broiler, 
who  is  an  agqpt  simply  to  negotiate  sales.  In  his  capacity 
of  Broker  he  has  not  confided  to  him  the  possession  of  the 
property  of  which  he  negotiates  the  sale. 

QUESTIONS. 

How  is  agency  divided?  WHiat  is  a  Special  Agent?  What  a 
General?  What  is  a  Limited  Agency,  and  to  what  does  it  apply? 
What  an  Unlimited  Agency,  and  to  what  does  it  apply?  What  is  tho 
commercial  division  ?    What  is  a  Factor  f    What  a  Broker  ? 


4:4        EXTENT  AND  EXECUTION  OF  AUTHORITY. 

PART  III. 

EXTENT  AND  EXEOUTION  OF  AUTHORITT. 

§  85.  In  giving  effect  to  all  -written  powers,  such  as 
Letters  of  Attorney,  or  of  instruction,  they  are  to  receive 
such  an  interpretation  as  that  the  authority  is  never  to  be 
extended  heyond  that  which  is  given  in  terms,  or  is  abso- 
lutely necessary  for  carrying  the  authority  so  given  into 
effect.  But  while  this  principle  is  adopted,  it  should  also 
be  made  to  include  all  necessary  or  usual  means  of  execut- 
ing it  with  effect.  A  broker,  for  instance,  who  is  employed 
to  get  a  policy  effected  may  adjust  the  loss,  and  do  every 
thing  necessary  for  procuring  such  adjustment.  An  agent 
employed  to  settle  losses  may  refer  a  controversy  about  a 
loss  to  arbitration.  An  agent  employed  to  get  a  bill  dis- 
counted, may,  unless  expressly  restricted,  indorse  the  name 
of  his  principal,  and  bind  him  by  such  indorsement.  So 
an  agent  when  intrusted  with  property  to  sell,  may,  unless 
specially  forbidden,  bind  the  owner  of  it  by  a  warranty 
given  on  the  sale.  There  is  an  exception  in  the  case  of  an 
auctioneer,  who,  as  such,  has  no  authority  to  bind  the  owner 
by  a  warranty. 

§  86.  Tlie  extent  or  scope  of  an  authority  is  to  be  gath- 
ered from  the  commission  by  which  it  is  given,  the  construc- 
tion of  w^hich  may  be  assisted  by  resorting  to  the  usages  of 
trade.  Such  an  authority  empowers  ..the  ag^nt  to  bind  his 
principal  by  all  acts  within  the  scope  of  his  employment, 
no  matter  what  may  have  been  his  private  instructions,  not 
known  to  the  party  with  whom  ho  deals.  This  general 
authority  arises  from  a  general  employment  in  some  specific 
capacity,  such,  for  instance,  as  a  Factor  or  Broker. 

§  87.  Strangers  are  governed,  and.  have  a  right  to  be, 
by  the  acts  of  the  parties,  not  by  any  private  commimica- 
tions  passing  between  them.  Whatever  amount  of  authority 
a  principal  by  his  acts  and  public  declarations  confers  upon 


EULE  FOK  A  SPECIAL  AGENCY.  45 

a  general  agent  lie  will  be  bound  by  as  against  all  who  base 
tbeir  action  upon  such  acts  and  declarations.  It  is  not  in 
such  case  the  authority  actually  received  by  the  agent  that 
is  to  guide.  It  is  that  which  the  principal  allows  him  to 
assume.  A  banking  corporation,  for  instance,  are  bound 
by  notice  of  such  matters  relating  to  the  ordinary  busmess 
of  the  institution  as  are  known  to  their  cashier.  New  Hope 
&  Delaware  Bridge  Company  v.  Phoenix  Bank,  3  Comst. 
156.  An  Insurance  Company  is  bound  by  a  notice  to  their 
travelling  agent.  McEwen  v.  The  Mantgomery  County 
Mutual  Insurance  Company,  5  Ilill,  101. 

§  88.  The  rule  is  different  in  the  case  of  a  special  agent. 
Such  an  agency  carries  on  its  face  a  limitation,  and  that  is 
sufficient  notice  to  all  dealing  with  such  an  agent,  to  put 
them  on  inquiry.  They  are,  therefore,  bound  to  ascertain 
the  extent  of  his  agency.  Eut  even  here  if  the  principal, 
by  his  act  or  declaration,  authorizes  the  belief  that  larger 
powers  are  given  than  are  actually  conferred,  and  that  belief 
is  entertained  and  acted  upon,  it  will  determine  the  measure 
of  his  liability.  Tlie  same  rule  applicable  to  a  special  agent 
applies  equally  where,  from  the  nature  of  the  appointment, 
it  Ji  evident  the  agent  must  be  acting  under  an  authority 
derived  from  a  person  who  possesses  merely  a  restricted 
authority,  such,  for  instance,  as  an  executor  or  adminis- 
trator.    Owings  v.  Hull,  9  Peters,  607. 

§  89.  An  agent  or  factor  having  a  general  power  of  sale 
is  authorized  by  it  to  sell  on  credit  when  that  is  the  usual 
mode  of  conducting  that  kind  of  business,  although  it  may 
be,  at  the  time,  unknown  to  the  principal.  This  has  an 
exception  in  the  case  of  an  agent  for  a  state. 

§  90.  Tliis  rule,  however,  has  a  limitation  to  the  disposi- 
tion of  property  l)y  way  of  sale.  It  docs  not  include  barter. 
Nor  can  a  factor  at  Common  Law  make  a  valid  pledge  of 
the  goods  of  his  principal,  although  it  be  for  the  purpose  of 
raising  money  to  meet  bills  dra^vn  on  him  for  their  proceeds. 
In  those  states,  however,  whose  mercantile  interests  are 


40  factor's  bale  creates  a  contract. 

mucli  advanced,  the  Common  Law  has  been  modified  "by  legis- 
lation giving  the  consignee  or  agent  all  those  powers  relating 
to  the  consigiuiient  that  are  essential  for  his  own  protection. 

§  91.  Thcxauthority  of  an  agent  to  receive  money  due  to 
his  principal  oji  a  written  security  is  limited  to  those  cases 
in  which  the  agent  is  himself  in  possession  of  the  security. 
That  is  regarded  as  the  best  evidence  of  his  authority,  and 
hence  without  it,  the  debtor  is  not  safe  in  paying  the  agent, 
although  the  money  had  been  obtained  through  his  instru- 
mentality, and  although  on  former  occasions  he  may  have 
received  and  paid  over  to  the  principal.  There  may,  how- 
ever, be  sufficient  authority  given  to  supply  the  aljsence  of 
the  security,  but  the  debtor  before  paying  should  assure 
himself  of  the  one  or  the  other. 

§  92.  "Where  a  known  agent  is  intnisted  with  goods  for 
sale,  a  payment  to  him,  Avhere  no  notice  has  been  given  by 
the  principal  to  the  contrary,  discharges  the  debtor.  But 
a  broker,  not  having  possession,  has  no  such  authority  to 
receive,  unless  the  custom  of  trade,  or  the  usual  course  of 
dealing  between  him  and  his  principal,  fully  justifies  him  in 
so  doing.  Where,  however,  the  principal  is  undisclosed,  he 
may  bind  by  receiving  payment,  as  he  then  stands  in  Ihe 
place  of  the  proprietor. 

§  93.  The  general  principle  is  that  a  factor's  sale  creates 
a  contract  between  the  principal  and  the  purchaser,  so  that 
a  notice  by  the  former  to  the  latter  not  to  pay  the  factor, 
will  constitute  a  limitation  on  the  factor's  right  to  receive ; 
except  where  the  factor  acts  under  a  del-credere  commission, 
or  where  a  balance  of  account,  equal  to,  or  exceeding  the 
amount  paid,  is  due  from  the  principal  to  the  factor. 

§  94.  Wliere  the  agent's  authority  is  of  sufficient  extent 
to  authorize  his  receiving  payment,  a  Under  to  him  has  the 
same  efiect  as  if  made  to  the  principal.  But  a  tender  by 
an  agent  fails  to  discharge  the  principal  without  actual  pay- 
ment. An  agent  cannot,  without  special  authority  for  that 
purpose,  compound  and  discharge  a  debt  due  his  principal. 


PKOPER  EXECTJTION  OF  AUTHOKITY.  4Y 

§  95,  The  rule  is,  that  a  special  authority  must  be 
strictly  pursued,  but  still  a  power  to  do  any  act  is  held  to 
comprise  a  power  to  do  all  such  subordinate  acts  as  are 
usually  incident  to,  or  necessary  to  eflectuate,  the  principal 
one  in  the  best  and  most  convenient  manner.  Hence,  if  the 
intention  be  to  exclude  any  circumstance  which  would 
naturally  fall  within  this  principle,  it  must  be  evidenced  by 
express  directions.  Thus  to  escape  liability  on  a  Avarranty 
made  by  the  agent  on  the  sale  of  an  article,  there  must  be 
express  directions  not  to  warrant. 

§  96.  Tlie  extent  of  authority  is  liable  to  be  varied  by 
necessity.  This  applies  more  especially  to  masters  of  vessels, 
and  occurs  where  unforeseen  contingencies  arise,  and  there  is 
no  opportunity  of  getting  new  instructions  based  upon 
them.  In  such  and  similar  cases,  the  law  vests  a  large  dis- 
cretion in  the  agent,  and  holds  the  principal  bound  for  those 
acts  which  evince  a  sound  exercise  of  it. 

§  97.  The  inquiry  as  to  the  proper  execution  of  the 
authority  involves  the  consideration  of  the  person  to  exe- 
cute, and  the  manner  of  executing.  The  person  is  the  agent 
appointed  by  the  principal.  The  general  principle  precludes 
the  delegation  of  any  authority  by  one  agent  to  another  of 
his  own  appointment,  on  the  ground  that  the  original  dele- 
gation was  a  personal  trust,  and  therefore  neither  assignable 
nor  transferable.  The  original  authority  may,  and  generally 
does,  contain  the  power  of  appointing  a  sub-agent,  or  the 
general  usage  of  business  may  justify  the  employment  of  a 
broker  for  the  negotiation  of  sales  of  merchandise.  Persons 
deriving  authority  under  a  legislative  enactment  have  no 
power  of  substitution.  Lyon  v.  Jerome^  26  TFt^nf?.,  4S5. 
A  delegated  act,  which  is  merely  mechanical  in  its  execu- 
tion, as  the  accepting  of  a  bill,  may  be  delegated  to  an- 
other. 

§  98.  As  to  the  manner  of  executing,  one  rule  is  that  a 
special  authority  must  be  strictly  pursued,  and  a  very  slight 
variance  is  such  a  departure  as  will  render  the  act  void  at 


48  agent's  atjthoeity  to  sell. 

the  election  of  tlic  principal.  Tims  an  authority  to  sell  at 
a  particular  price  does  not  authorize  to  sell  at  a  less  price, 
unless  the  agent  choose  himself  to  make  up  the  difference. 
An  authority  to  sell  by  auction  does  not  authorize  a  dispo- 
sition by  private  sale.  If  the  agent  obtains  better  terms 
than  are  embraced  in  his  instructions,  his  principal  will  be 
bound.  Ilis  execution  in  part,  as  of  the  purchase  of  thirty 
shares  of  stock,  his  authority  being  to  buy  fifty,  will  be 
good  to  that  extent.  Tlie  major  will  generally  include  the 
minor,  and  hence  a  power  to  sell  contains  a  power  to  mort- 
gage, that  being  merely  a  conditional  sale. 

§  99.  Tlie  act  done  must  be  in  the  name  of  the  principal, 
and  not  in  that  of  the  agent.  A  deed,  if  executed  in  the 
name  of  the  agent,  is  no  deed  of  the  principal.  It  may  be 
executed  by  signing  the  principal's  name  alone,  or  the  name 
of  the  principal  by  the  agent.  There  is  some  little  relaxation 
of  this  rule  for  commercial  purposes,  so  far  as  regards  nego- 
tiable paper,  but  the  agent  should  either  sign  the  name  of  his 
principal  to  the  paper,  or  it  should  appear  on  its  face  that  it 
was  in  fact  drawn  for  him,  or  he  will  not  be  bound. 

QUESTIONS. 

"What  is  tlio  rule  of  construction  as  to  Letters  of  Attorney,  or  of 
instruction  ?  "What  do  they  include  ?  TVhat  illustrations  ?.  What  ex- 
ception ?  What  is  the  extent  of  the  authority  to  be  gathered  from  ? 
How  far  does  it  empower  the  agent  to  bind  his  principal  ?  What  does 
general  authority  arise  from  ?  What  are  strangers  governed  by  ?  What 
the  principal  bound  by  ?  What  the  test  of  authority  ?  What  illustra- 
tions ?  What  the  rule  in  the  case  of  a  special  agent  ?  What  are  those 
dealing  with  such  bound  to  ascertain?  What  may  the  principal  do 
here  ?  What  rule  where  the  party  appointing  acts  under  restricted 
authority  ?  What  illustration  ?  What  does  a  general  power  of  sale 
authorize,  and  in  what  case,  and  with  what  exception  ?  What  is  the 
limitation  of  the  power  of  sale  ?  How  is  it  as  to  barter  and  pledge  ? 
What  is  the  limitation  of  authority  to  the  agent  to  receive  money,  and 
in  what  case  ?  What  may  supply  the  non-possession  ?  In  what  case  is  a 
payment  good  by  a  purchaser  ?  How  in  case  of  sale  by  brokers,  and  why, 
and  what  exception?    How  where  the  principal  is  undisclosed,  and 


DUTIES   OF  AGENT.  49 

why  ?  "What  is  created  by  a  factor's  sale  ?  TVTiat  effect  has  notice  by 
the  principal  to  a  purchaser?  What  exceptions?  When  is  tender  to 
agent  good?  "When  by  agent?  When  can  agent  compound  and  dis- 
charge debts  ?  How  must  special  authority  bo  pursued  ?  What  does 
power  to  do  an  act  comprise  ?  What  must  be  done  to  exclude  any 
circumstance?  What  instance?  How  can  authority  bo  varied  by 
necessity  ?  IIow,  or  to  whom  applied  ?  What  does  a  proper  execution 
involve  ?  Who  must  the  person  executing  be  ?  How  as  to  the  power 
of  delegation,  and  why  ?  What  should  the  original  authority  contain  ? 
What  may  justify  the  employment  of  a  broker  to  sell?  How,  where 
the  authority  is  derived  from  legislative  enactment?  How,  where  the 
act  is  merely  mechanical  ?  What  is  the  effect  of  a  slight  variance  in 
case  of  special  authority  ?  Illustrations  what  ?  An  agent  obtaining 
better  terms  ?  Execution  in  part  ?  AVhat  instance  of  major  including 
minor  ?  In  what  name  should  the  act  be  done  ?  What  effect  if  in  the 
name  of  the  agent  ?  How  should  it  be  executed  ?  What  instance  of 
relaxation  ?    How  should  negotiable  paper  be  executed  by  the  agent  ? 

PART  IV. 

DmES,   LI^vniLITIES,    AXD   RIGHTS   OF  TDE  AGENT, 

§  100.  The  agent  is  bound  to  obey  instructions,  and 
when  explicit  they  prechtde  the  exercise  of  any  discretion. 
But  when  the  tiling  to  be  done  is  such  that  two  or  more 
diflferent  modes  of  doing  it,  will  answer  equally  well,  he 
may  choose  either  one,  provided  no  other  has  been  particu- 
larly prescribed.  In  the  case  of  a  simple  consignment  of 
goods  to  a  factor,  the  consignor  may,  from  time  to  time, 
control  the  sale.  But  if  the  factor  has  made  advances  or 
incun-ed  liabilities  on  accoimt  thereof,  he  may,  in  the  ab- 
sence of  any  agreement  to  the  contrary,  sell  so  much  of  the 
consignment  as  may  reimburse  such  advances,  or  meet  such 
liabilities.  But  if  the  consignor  offers  to  reimburse  and 
discharge,  it  restores  his  ability  to  control.  The  principle 
established  is — that,  in  the  absence  of  all  prior  orders  and 
agreements,  the  factor  by  making  advances  and  incurring 
liabilities  entitles  himself  to  control  the  consijrnment  with 
a  view  to  rciiuburscnicnt,  unless  the  consignor  chooses  to 
restore  his  own  power  and  authority  to  control  by  removing 
4 


50  LIABILITIES   OF  AGENT. 

the  cause  or  occasion  that  has  transferred  it  to  the  factor. 
Brown  V.  McGran,  14  Peters^  479. 

§  101.  An  agent  may  incur  a  liability  to  his  principal 
beyond  the  repayment  of  the  money  and  interest.  If  the 
money  sent  him  to  purchase  a  particular  article,  should  be 
wilfully  converted  to  his  own  use,  and  the  article  should 
subsequently  acquire  additional  value,  his  disobedience  of 
instructions  might  be  punished  by  holding  him  responsible 
for  the  increased  value  of  the  article. 

§  102.  An  agent  is  bound  to  use  all  ordinary  diligence 
and  care  in  the  execution  of  his  trust.  In  the  absence  of 
specific  instructions  he  must  pursue  the  accustomed  course 
of  that  business,  in  which  he  is  employed.  As  he  receives 
compensation  for  his  services,  he  is  bound  to  bring  to  his 
midertaking  such  a  degree  and  amount  of  skill  and  knowl- 
edge as  would,  in  ordinary  cases,  insure  its  successful  ac- 
complishment. Whoever  holds  himself  out  as  ready,  for  a 
compensation,  to  transact  a  particular  kind  of  business  for 
others,  is  presumptively  possessed  of  the  requisite  skill,  and 
held  responsible  for  its  exercise.  For  instance,  an  agent  is 
employed  to  negotiate  bills  of  exchange  ;  if  he  fails  to  pro- 
cure acceptance,  he  should  protest  for  non-acceptance,  and 
immediately  advise  the  principal. 

§  103.  Tlie  agent's  liability  for  negligence  or  neglect  of 
duty  is  not  limited  to  the  direct  injury  occasioned  to  the 
property  of  the  principal.  He  is  also  Kable  to  make  good 
all  injuries  which  his  own  act,  as  agent,  has  occasioned  to 
the  property  of  others,  and  which  the  principal  has  been 
called  upon  to  pay,  and  hence  a  verdict  obtained  against 
the  principal  for  the  act  of  his  agent,  is  the  measure  of 
damages  in  favor  of  the  former  against  the  latter.  An 
agent,  however,  is  not  liable  for  neglecting  an  act  expressly 
directed,  provided  that,  when  performed,  it  would  not  have 
entitled  his  employer  to  any  legal  benefit,  although  it  might 
have  conferred  a  probability  of  advantage  founded  upon 
mere  courtesy. 


RESPONSIBILITIES  OF  AGENT.  51 

§  104.  An  agent  is  not  chargeable  with  a  breach  of  in- 
structions in  three  cases — 

1.  Where  an  nnforeseen  necessity  arises,  not  originally 
contemplated  by  the  parties. 

2.  Where  the  cu-cumstances  are  such,  that  a  strict  com- 
pliance is  rendered  impossible. 

3.  Where  a  compliance  would  have  been,  in  effect,  the 
perpetration  of  a  fraud  upon  others,  and  where,  therefore, 
the  plaintiff,  in  order  to  recover,  must  allege  his  own  fraud ; 
as  where  an  auctioneer  is  directed  to  put  up  property  osten- 
sibly to  sell  to  the  highest  bidder,  and  yet  not  to  sell  it 
below  a  certain  sum  ;  and  the  auctioneer  strikes  it  off  to  the 
highest  bidder,  although  below  that  sum.  His  instructions, 
if  obeyed,  would  have  been  a  fraud  upon  the  bidders,  and 
hence  they  were  rightly  disobeyed. 

§  105.  In  equity  an  agent  cannot  make  himself  an 
adverse  party  to  his  principal,  on  the  ground  that  a  man 
cannot  there  be  permitted  to  defeat  a  trust  which  he  has 
once  accepted,  and  entered  upon  the  performance  of.  The 
confidence,  which  should  exist  between  the  principal 
and  agent,  is  highly  regarded  by  a  court  of  equity ;  so 
much  so,  that  it  often  interferes  to  set  aside  improvident 
grants  made  in  favor  of  persons  confidentially  intrusted 
with  the  conduct  and  management  of  the  property  so 
bestowed.  Iliiguenin  v.  Basely^  14  Yesey^  273.  But  this 
has  no  application  to  those  agents  who  are  merely  em^^loyed 
as  instruments  in  the  performance  of  some  appointed  ser- 
vice, but  only  for  those  who  are  relied  upon  for  counsel  and 
direction,  and  whose  emplopnent  partakes  more  of  the 
nature  of  a  trust  than  a  service. 

§  106.  A  factor,  or  other  agent,  in  the  possession  of 
property,  is  responsible  to  a  reasonable  extent  for  its  safety 
and  j)resci*vation.  lie  occupies  the  position  of  a  bailee  for 
hire,  and  is  bound  to  bestow  the  same  amount  of  care  and 
attention  upon  the  goods  of  his  principal,  as  he  would  imder 
similar  circumstances,  upon  those  of  his  own.     lie  is  bound 


52  DUTY  OF  AGENT  TO  mSlTRE. 

to  keep  tliem  with,  as  muchi  care  as  a  man  of  cmerage  'pru- 
dence would  bestow  in  the  keeping  of  his  own. 

§  107.  A  very  important  subject  of  inquiry  relates  to 
the  circumstances,  under  which  an  agent  is  bound  to  insure 
the  property  of  his  principal  while  it  remains  in  his  posses- 
sion.   He  is  bomid  so  to  insure — 

1.  Where  the  principal  has  effects  in  his  hands,  and 
directs  their  application  to  such  insurance. 

2.  "Where  there  are  no  effects  in  the  hands  of  the  agent, 
but  the  course  of  dealing  between  them  has  been  such  that 
the  one  has  been  accustomed  to  send  orders  to  insure,  and 
the  other  to  execute  them.  He  is  bound  to  continue  to 
obey  such  orders,  until  he  gives  notice  to  discontinue  that 
course  of  dealing. 

3.  Where  bills  of  lading  come  to  the  agent  with  an 
order  to  insure,  this  being  the  implied  condition  of  their 
acceptance.  Under  such  circumstances  the  acceptance  of 
the  bills  of  lading  subjects  the  agent  to  the  performance 
of  the  condition. 

4.  Where  the  general  usage  of  trade  requires  the  agent 
to  insure. 

§  108.  In  case  it  becomes  the  duty  of  the  agent  to 
insure,  and  he  omits  to  do  so,  he  is  himself  considered  the 
insurer,  and  liable,  in  the  event  of  loss ;  and  so  fully  is  this 
principle  earned  out,  that  the  agent  is  even  entitled  to  be 
credited  with  the  premium,  which  should  have  been  paid. 
If  he  makes  all  reasonable  efforts,  and  fails  in  accomplish- 
ing the  insurance,  he  should  immediately  inform  his  princi- 
pal, so  as  to  enable  him  to  effect  insurance  elsewhere,  or 
upon  other  terms.  The  agent  in  such  case  can  avoid  lia- 
bility, by  showing  that  by  his  instructions  he  was  bound  to 
communicate  a  certain  fact  to  the  insurers,  and  that  if  he 
had  communicated  it,  no  insurance  could  have  been  ob- 
tained, and  that  if  he  had  not,  any  insurance  he  might  have 
effected  would  have  been  void.    And  generally  he  is  entitled 


LIAEILITY   OF  AGENT.  53 

to  every  species  of  defence  wliicli  the  insurers  themselves 
might  have  interposed. 

§  109.  In  contracts  mado  by  agents,  as  such,  two  classes 
of  questions  arise ;  the  first  between  the  principal  and 
agent ;  whether  the  duty  of  the  latter  has  been  faithfully 
performed ;  the  last  between  the  principal  and  third  per- 
sons, whether  the  fonner  is  or  is  not  bound  by  the  contract. 
An  illustration  of  the  first  occurs  where  the  agent  is  in- 
structed to  sell  not  below  a  definite  sum,  in  which  case  he 
will  not  be  justified  in  selKng  under  it,  unless  the  mode  of 
sale  directed  would  make  a  secret  limitation  of  the  price 
a  fraud  upon  the  purchasers.  Any  deviation  from  his  orders 
to  purchase,  whether  relating  to  the  price,  quality,  or  kind, 
gives  to  the  principal  an  option  to  receive  the  goods  pur- 
chased or  not.  So  strictly  is  an  agent  held  bound  to  obey 
his  instructions  that  in  a  case  where  he  was  directed  to  em- 
ploy the  money  in  his  hands  in  the  purchase  of  a  bill  for  his 
principal,  and  he  purchased  it  on  his  own  credit  and  it  proved 
not  collectable,  the  principal,  hy  reason  of  the  disobedience^ 
recovered  against  the  agent.     Hays  v.  Stone,  7  Hill,  128. 

§  110.  Where  goods  have  been  purchased  by  the  agent 
at  a  greater  sum  than  the  principal  directed,  and  the  latter, 
for  that  reason,  elects  to  reject  the  contract  ;'^et,  if  he  has 
advanced  money  upon  them,  he  need  not  return  them  to  the 
agent,  but  may  make  the  best  disposition  of  them  he  is  able, 
accounting  to  his  agent  for  the  proceeds  over  and  above  his 
advances.  In  the  case  settling  this  principle,  Coimioall  v. 
Wilson,  1  Vesey  Sr.  509,  Lord  Hardwick  suggests  a  curious 
balancing  of  equities  that  may  arise  in  a  case  of  specific 
instructions,  and  justify  a  deviation  by  the  agent ;  as  where 
the  price  of  goods  to  be  purchased  is  limited,  but  not  the 
freight  to  be  paid,  and  the  price  is  falling  in  the  market, 
while  the  freight  is  rising,  and  the  agent  purchases  at  a 
higher  price  than  he  is  directed,  and  by  slii2:)ping  imme- 
diately saves  more  in  the  freight  than  the  excess  of  the 
price  j)aid.     This  he  suggusts  would  justify  the  agent. 


64  OBLIGATIONS   OF   AGENT. 

§  111.  It  is  a  rule  of  very  rigid  application,  Loth  to 
sales  and  i)uroliases,  tliat  an  agent  employed  to  sell  cannot 
make  himself  the  purchaser,  or  to  purchase,  tlie  seller. 
"Nor  can  he  even  he  permitted  to  purchase  an  interest  in 
property,  and  hold  it  for  his  own  benefit  when  he  has  any 
duty  to  perform  in  reference  to  such  property  inconsistent 
with  his  exclusive  ownership  of  it.  Van  Epjps  v.  Van 
Epps,  9  Paige,  237. 

§  112.  An  agent  is  not  ordinarily  compellable  to  account 
for  the  price  of  goods  sold,  until  it  has  been  received  by 
him.  There  are  two  exceptions  to  this  rule — where  goods 
have  been  improperly  sold  upon  credit,  and  where  the  delay 
of  payment  has  been  occasioned  by  his  own  neglect.  A 
question  has  been  raised,  whether  an  agent  who  acts  under  a 
del  credere  commission — (that  is  one,  who  for  a  higher  com- 
pensation guarantees  all  sales  made  by  him  of  his  princi- 
pal's property) — is  not  directly  liable  in  the  first  instance, 
without  any  reference  to  the  original  debtor ;  but  the  law,  as 
now  understood,  regards  him  merely  in  the  light  of  a  surety, 
and  hence  holds  him  liable  only  on  the  default  of  the  pur- 
chaser. He  may,  however,  by  drawing  a  bill  on  the  pur- 
chaser in  favor  of  his  principal,  render  himself  directly  liable. 

§  113.  An  agent  who  has  collected  money  for  his  prin- 
cipal'  and  deposits  it  to  his  own  credit  with  his  general 
banker,  takes  himself  the  responsibility  of  the  solvency  of 
the  banker.  But  if  he  exercise  reasonable  prudence  in  the 
choice  of  a  depositary,  and  there  places  the  funds  to  the 
credit  of  his  principal,  apprising  him  that  he  may  draw  for 
the  same,  he  assumes  no  such  liability,  for  that  is  one  of  the 
modes  by  which  they  may  be  transmitted. 

§  114.  An  agent  is  bound  to  keep  a  coiTcct  account  of 
all  his  transactions  as  such ;  and  from  time  to  time,  and 
whenever  called  upon  to  do  so,  communicate  its  results  to 
his  principal.  A  failure  in  the  performance  of  this  duty 
will  subject  Imn  to  a  call  from  the  Court  of  Chanoery,  and 
ultimately  to  a  decree  compelling  an  account — and  this  may 


LIABILITIES   OF   AGENT.  55 

be  done  after  a  lapse  of  many  years.  In  such  rendition  of 
account  he  must  include  all  the  increase  which  the  property 
confided  to  him  has  realized.  If  he  have  made  interest,  he 
is  liable  for  it,  and  so  he  is,  whether  made  or  not,  if  he 
mixes  the  money  with  his  OAvn  funds,  using  the  whole  in 
his  own  business. 

§  115.  Agents,  who  are  acting  under  a  joint  commis- 
sion, are  liable  for  each  other's  receipts,  and  a  joint  consign- 
ment renders  each  liable  to  account  for  the  whole.  It  is  no 
reason  for  discharging  one  from  liability  that  the  business 
was  wholly  transacted  by  the  other,  and  that  M'ith  the 
knowledge  of  the  principal.  A  discharge  of  one,  at  com- 
mon law,  is  a  discharge  of  all. 

§  IIG.  Although  an  agent  can  always  avoid  any  personal 
liability  by  contracting  only  in  the  name  of  his  principal, 
and  within  his  authority  ;  yet  there  are  four  possible  cases, 
in  which  he  may  assume  a  personal  liability — 

1.  Where  the  jirincipal  is  not  known. 

2.  Where  there  is  no  resjionsible  j^rincipal,  except  in  the 
case  of  public  agents. 

3.  Where  the  undertaking  is  expressly  his  own. 

4.  Where  he  exceeds  his  authority. 

An  illustration  of  the  second  case  is  where  the  commit- 
tee of  a  club  were  sought  to  be  made  responsible  in  an 
agreement  entered  into  by  them,  on  account  of  tlie  clul), 
and  it  was  held  that  they  were  liable  without  making  the 
rest  of  the  subscribers  parties.  Cullen  v.  The  Diike  of 
Queensherrrj^  1  Brown^s  P.  C.  393. 

§  117.  An  agent  who  binds  himself  by  a  fonnal  engage- 
ment always  incurs  a  personal  liability  ;  and  even  a  mere 
description  of  the  person,  or  designation  of  the  cluiracter  in 
which  a  party  assumes  to  contract,  on  behalf  of  another, 
does  not  necessarily  exonerate  him.  lie  must  not  only 
describe  himself  as  agent,  but  the  language  of  the  instru- 
ment mUst  not  import  any  personal  contract  on  his  part. 
So  if  he  exceeds  his  authority  so  far  that  the  principal  is  not 


56  LIAIULITIES  AND   lilGIITS  OF   AGP^NT. 

legally  1)01111(1  as  a  contracting  party,  he  becomes  himseK 
liable  to  the  person  with  ■whom  he  deals. 

§  118.  The  masters  of  sliips,  although  well  known  as 
the  agents  of  the  owners,  are  nevertheless  liable  on  contracts 
they  make  for  repairs,  unless  they  take  special  care  to  avoid 
it  by  the  express  terms  of  the  contract.  And  so  where 
money  has  been  paid  to  an  agent  for  the  use  of  the  princi- 
pal, under  such  circumstances  that  it  might  be  recovered 
back  from  the  latter  had  it  been  paid  to  him,  the  agent 
himself  will  remain  personally  liable  to  the  party  paying  it 
so  long  as  it  remains  in  his  possession,  and  his  situation 
with  the  principal  is  unaltered.  A  payment  over,  or  a  fresh 
credit  upon  the  faith  of  it,  will  so  change  the  relations  as 
to  take  away  the  liability. 

§  119.  An  agent  is  never  liable  to  third  persons  for  mere 
non-performances  of  duty,  but  only  to  his  principal  with 
whom  is  his  undertaking.  But  for  tortious,  or  wrongful 
acts,  whether  done  by  the  authority  of  his  principal  or  not, 
he  is  liable  to  third  persons.  This  liability  is  not  as  an 
agent,  but  as  a  wrong-doer  ;  as  he  is  only  bound  to  obey  the 
lawful  commands  of  his  principal.  Although  his  refusal  to 
deliver  goods  to  the  true  owner,  may,  if  unqualified,  render 
him  liable  as  for  a  conversion,  yet  it  will  not  have  that 
effect  if  cpiahfied  by  a  declaration  that  he  cannot  deliver 
them  without  the  authority  of  his  principal. 

§  120.  The  main  right  of  the  agent,  in  subserviency  to 
which  most  of  his  other  rights  exist,  is  to  receive  a  compen- 
sation, by  way  of  commission,  or  otherwise,  for  his  services. 
This  right  to  his  commission  on  sales  gives  him  an  insurable 
interest  in  the  goods  of  his  principal.  Its  amount  is  gene- 
rally determinable,  either  by  a  special  agreement,  or  the 
usage  of  trade,  or  by  a  statutory  enactment.  Even  in  the 
absence  of  all  these  it  may  be  left  to  the  jury  to  give  the 
agent  a  reasonable  remuneration.  Brown  v.  Nalrne^  9  Carr 
&  Paine,  201.  And  in  some  cases,  where  there  is  a  special 
agreement,  he  may  be  entitled  to  additional  compensation 


EIGHTS  OF  AGENT.  57 

for  additional  services.     United  States  v.  FiUtbrown^  7 
Peters,  28. 

§  121.  An  agent  employed  in  the  carrying  out  of  an 
illegal  contract  can  recover  against  liis  principal  no  compen- 
sation, where  the  illegality  must  necessarily  appear  in  the 
making  out  of  his  case  for  a  recovery.  But  the  agent  can- 
not protect  himself  against  the  pajTiient  of  money  under 
the  plea  that  it  was  received  in  an  illegal  transaction,  as 
the  only  and  necessary  inquiries  there  yould  he — 

1.  Did  the  agent  receive  the  money  ?  and 

2.  On  whose  account  did  he  so  receive  it  ? 

§  122.  An  agent  may  also  so  conduct  himself  as  to  for- 
feit all  right  to  his  commission.  One  mode  of  doing  this, 
would  be  the  neglecting  to  keep  accounts,  so  that  no  fomida- 
tion  was  laid  for  ascertaining  the  amount  due.  Another 
mode  is  the  rendering  the  service  so  negligently,  and  un- 
skilfully, that  no  benefit  accrues  to  the  principal.  Another 
by  departing  from  liis  character  as  agent  and  acting  ad- 
versely to  his  principal  in  any  part  of  the  transaction. 

§  123.  A  question  of  some  doubt  and  difficulty  has 
occurred  under  the  usury  laws  of  some  of  the  States,  as  to 
the  right  of  the  agent  to  receive  commissions  over  and 
above  the  legal  rate  of  interest.  But  it  is  now  very  well 
understood  that  the  receiving  compensation  by  such  com- 
mission for  accepting  and  paying  bills  with  funds  furnished 
by  the  principal  is  not  usurious  ;  nor  is  it  necessarily  so  if 
the  agent  himself  advances  the  funds  for  that  purpose. 

§  124.  An  agent  has  also  the  right  over  and  above  or 
beyond  all  commissions  he  may  be  entitled  to,  to  be  re- 
imbursed all  advances  made  by  him  for  his  principal  in 
the  regular  course  of  his  employment,  and  also  all  dam- 
ages and  costs  to  which  he  may  have  been  subjected  in  the 
due  performance  of  his  agency.  A  question  attended  with 
much  difficulty  relates  to  the  advances  an  agent  may  be 
justified  in  making  under  peculiar  circumstances  in  which 
he  may  happen  to  be  placed.     A  cargo  is  sent  so  late  in  the 


58  EIGHTS  OF  AGENT 

season  as  to  hazard  its  safety.  lie  may,  without  orders, 
insure.  The  conduct  to  be  pursued  must  be  very  cautious  in 
order  to  avoid  those  advances  that  are  voluntary  and  officious, 
and  therefore  give  him  no  right  of  recovery  back.  In  order 
that  an  agent  may  be  safe  in  the  making  of  advances,  it  is 
necessary  that  they  should  be  either — 

1.  Covered  by  his  instructions  express  or  implied  ;  or 

2.  Justified  by  the  former  course  of  dealing  between 
them ;  or 

3.  By  a  ■well-recognized  usage  ;  or 

4.  Be  sanctioned  by  the  subsequent  acquiescence  of  the 
principal. 

§  125.  The  right  of  Lien,,  which  an  agent  possesses,  and 
may  enforce  against  his  principal  in  reference  to  property 
in  his  possession,  will  be  considered  under  Remedies.  His 
rights  as  against  third  persons  are  grounded  on  the 
interest  he  has  in  the  property  growing  out  of  his  commis- 
sions, and  also  upon  his  duties  in  safely  and  securely  keep- 
ing it.  An  auctioneer,  for  instance,  is  held  to  have  such  a 
special  property  in  the  goods  as  to  enable  him,  at  common 
law,  to  maintain  an  action  in  his  own  name  for  the  price. 
Williams  v.  Ifillington,  1  H.  Black.  81.  So  the  mere 
possession  by  a  factor  of  the  goods  of  his  principal,  entitles 
him  to  bring  actions  for  injuries  affecting  the  possession. 

QTJESTIONS. 

"SVhat  is  the  duty  of  the  agent,  relating  to  instructions  ?  "When  do  they 
preclude  any  discretion  ?  How,  when  there  are  two  or  more  modes  of 
doing  a  thing  ?  "What  are  the  rights  of  consignor  and  factor  respectively 
as  to  controlling  sale,  and  how  may  such  right  he  transferred  from  one 
to  the  other  ?  THiat  is  the  liahility  in  case  of  money  sent  to  purchase  a 
particular  article  misapplied  ?  "What  is  an  agent  bound  to  use  ?  "What 
is  his  duty  where  there  are  no  specific  instructions  ?  What  must  he 
bring  to  his  undertaking?  What  is  he  presumptively  possessed  of? 
"What  instance  ?  What  is  his  liability  beyond  direct  injury  to  the  prop- 
erty of  his  principal  ?  Wliat  is  the  measure  of  damages  ?  When  is  an 
agent  not  liable  for  neglecting  an  act  expressly  directed?    In  what 


LIABILmES  OF  PEINCIPAL.  69 

cases  is  an  agent  not  chargeable  with  a  breach  of  instructions  ?  What 
instance  ?  "What  is  the  rule  in  equity  as  to  agent's  making  himself  an 
adverse  party  ?  "What  does  equity  often  do  ?  To  what  has  this  no 
application?  What  is  an  agent  in  possession  responsible  for?  "WTiat 
position  does  he  occupy?  What  amount  of  care  must  he  bestow? 
When,  and  under  what  circumstances,  is  an  agent  bound  to  insure  the 
property  of  his  principal  ?  What  is  the  consequence,  if  he  does  not  ? 
What  is  he  to  do  if  he  makes  efforts"  and  fails  ?  How  can  he  avoid 
liability  ?  What  two  classes  of  questions  arise  in  contracts  with  agents? 
What  illustration  of  one?  What  does  a  deviation  authorize?  What 
illustration  ?  If  a  principal  having  advanced  money  elects  to  reject  a 
contract  made  by  his  agent,  what  may  he  do?  What  instance  of 
balancing  of  equities  ?  What  is  the  rule  as  to  agent's  selling  and  buy- 
ing ?  What  further  application  ?  When  must  agent  account  for  price  ? 
When,  before  he  himself  receives  it  ?  How  is  agent  under  del  credere 
commission  liable,  and  how  regarded  ?  How  can  an  agent  become  liable 
by  depositing,  and  when  not  ?  What  is  the  duty  of  agents,  as  to  accounts  ? 
What  one  in  the  event  of  failure  ?  What  is  to  be  accounted  for  besides 
property  ?  When  is  he  liable  for  interest  ?  What  is  the  liability  of 
joint  agents?  When,  and  under  what  circumstances,  does  an  agent 
assume  personal  liability  ?  What  illustration  ?  How  does  he  always 
incur  personal  liability  ?  IIow,  in  case  he  describes  himself  as  agent  ? 
What  is  the  habUity  of  masters  of  vessels,  and  for  what  ?  When  to  re- 
pay money,  and  under  what  circumstances  ?  For  what  is  an  agent  liable 
to  the  principal  only,  not  to  third  persons  ?  To  whom  for  tortious  or 
wrongful  acts  ?  How  may  he  escape  conversion  of  property  of  another  ? 
What  is  the  main  right  of  the  agent  ?  What  does  this  right  give  him  ? 
How  may  amount  of  commissions  be  determined  ?  When  can  an  agent 
recover  no  compensation  ?  What  inquiries  only  are  necessary,  when  he 
is  required  to  pay  over  money  ?  What  are  the  modes  by  which  an  agent 
forfeits  his  right  to  any  commissions?  How  is  receiving  commissions 
beyond  legal  rate  of  interest  affected  by  usury  laws  ?  What  right  is 
there  beyond  commissions  ?  When,  and  under  what  circumstances  is  an 
agent  justified  in  making  advances  ?  What  are  his  rights  against  third 
persons  grounded  on? 

PART  V. 

LIABLLrriES  AND   EIGHTS   OF  TOE   PBIXCIPAL. 

§  120.  Tlic  principal  is  held  liable  for  tlie  negligence 
or  nnskilfiilness  of  the  agent,  "vrliile  acting  in  the  prosecution 
of  Ills  agency,  although  not  under  his  immediate  direction. 


60  LIAEILITIE8  OP  TEINCIPAL. 

The  essential  thing  here  is  the  acting  in  the  course  of  his 
employment.  If  an  agent,  while  on  the  business  of  his 
princijial,  drive  his  team  off  from  the  direct  road,  and  by 
his  careless  driving  injure  another,  tlie  principal  will  be 
liable.  But  if  without  leave,  and  on  his  own  business  he 
drive  the  team  about  and  inflict  an  injury,  he  alone  will  be 
liable. 

§  127.  It  was  formerly  held  as  in  the  case  of  Bush  v. 
Steinmany  1  Bos.  &  Pul.  404,  that  the  principal  was  liable 
for  all  acts  of  sub-agents,  or  under  employees,  deriving 
their  employment  however  remotely  from  his  immediate 
agent.  But  this  doctrine  is  now  overruled,  and  that  of  the 
limitation  of  liability  to  the  immediate  employee  only  estab- 
lished in  its  place.     Blake  v.  Ferris^  1  Seld.  48. 

§  128.  The  principal  is  not  liable  for  the  wilful  act  of 
his  agent,  which  occasions  damages  to  another.  An  agent 
wilfully  drives  his  principal's  carriage  against  another, 
without  his  direction  or  assent.  The  principal  is  not  liable. 
§  129.  Tlie  principal  will  be  clearly  liable  wherever  he 
has  expressly  commanded  a  wrong  to  be  done,  or  given 
orders  wliich  could  be  executed  only  by  its  commission  ;  but 
a  difliculty  has  occurred  in  clearly  establishing  the  line  of 
liability  where  the  agent  perpetrates  a  fraud  without  his 
authority  but  within  the  scope  of  his  employment.  Tlie 
general  principle  here  is  that  in  ordinary  cases  of  private 
individuals,  the  principal  is  liable  to  third  persons  for  the 
frauds,  torts,  misfeasances,  negligences,  and  defaults  of  the 
agent,  even  though  the  conduct  of  the  agent  was  without  his 
participation,  consent  or  knowledge,  provided  the  breach  or 
want  of  duty  arose  in  the  course  of  his  employment,  and  was 
not  a  wilful  dej^arture  from  it.  There  is  perhaps  a  seeming 
departure  from  this  principle  in  the  late  case  of  The  Me- 
chanics Baiik  V,  The  New  York  &  New  Hamn  Railroad 
Company,  3  Kern.  599.  But  a  distinction  was  taken  here 
between  acts  within  the  apparent  powers  of  the  agent,  and 
acts  apparently,  but  not  really,  within  his  powers.    For  the 


peestcipal's  liaetlitt  for  agents'  acts.  61 

former  the  principal  is  to  be  held  liable,  as  he  is  responsible 
for  the  appearance  of  his  agent's  powers  ;  but  not  for  the 
latter,  as  the  agent  alone,  if  any  one,  is  responsible  for  the 
appearance  of  his  acts. 

§  130.  Another  case  of  difficulty  has  occuiTed  somewhat 
the  reverse  of  that  last  stated.  A,  through  his  agent,  leases 
a  house  to  B,  which  had  a  nuisance  adjoining  it,  of  which  A 
was  fully  apprised,  but  did  not  communicate  the  fact  to  his 
agent,  who  was  ignorant  of  it,  and  stated  that  there  were 
no  objections  to  the  house.  Cornfoot  v.  ToioJcs,  6  Meeson  ds 
Welsh]/,  358.  The  court  held  the  contract  to  be  valid,  Lord 
Abinger  strongly  dissenting  on  the  ground  that  the  knowl- 
edge of  the  principal  was  the  knowledge  of  the  agent.  The 
doctrine  of  this  case  has  been  distinctly  overruled.  Lord 
Abinger  sustained,  and  the  contrary  established  in  Fitzsim' 
mons  V.  Joslin,  21  Vermont,  129,  which  asserts  and  main- 
tains the  doctrine  that  the  principal  would  be  implicated  to 
the  fullest  extent  for  that  which  he  knew,  if  he  took  the 
benefit  of  the  agent's  act.  Li  New  York,  in  Dexter  v.  Adams, 
2  Denio,  646,  it  is  earned  still  further,  and  establishes  the 
doctrine  that  if  the  principal  did  not  hioio,  and  a  party 
volmitarily  assumes  the  agency  and  commits  a  wrongful, 
fraudulent  act,  and  the  principal  afterwards  seelcs  to  take  ad- 
vantage of  it,  he  thereby  adopts  and  affirms  the  act,  and 
thus  defeats  his  own  action. 

§  131.  Another  principle  in  limitation  of  liability  has 
been  recently  established,  and  that  is  that  the  principal's 
liability  for  the  negligence  of  his  agents  is  confined  to 
strangers,  and  does  not  extend  so  far  as  to  render  him 
responsible  to  one  agent  for  an  injury  arising  from  the  care- 
lessness of  another,  who  is  engaged  in  the  same  general 
business.  This  question  has  the  most  frequently  arisen  in 
actions  brought  by  employees  against  railroad  coi-porations, 
as  in  Russell  v.  Hudson  River  Railroad  Co.,  17  l^eio  YorJc, 
134,  and  Sherman  v.  Syracuse  <&  Rochester  Railroad  Co.., 
17  New  York,  163. 


62  rRmciPAL's  liability  on  notice  to  agent. 

§  132.  The  principal  has  never  been  held  criminally 
responsible  for  the  acts  of  his  agent,  with  the  exception  of 
libel,  in  which  lie  lias  been  held  so  liable  on  the  ground  that 
he  derived  profits  from  the  publication,  furnished  the  neces- 
sary means  to  carry  it  on,  and  intrusted  the  conduct  of.  it 
to  one  of  his  own  selection. 

§  133.  Any  unlawful  meddling  with  or  conversion  of 
property  by  an  agent,  while  in  the  service  of  the  principal, 
subjects  the  latter  to  an  action.  lie  is  liable  if  he  previously 
command  or  subsequently  assent  to  it.  But  the  wrongful 
acts,  to  render  him  liable,  must  be  done  under  his  express 
direction,  or  in  his  service.  The  employment  must  afi'ord 
the  means  of  committing  the  injury.  But  he  can  be  made 
liable  for  no  wilful  trespass.  Foster  v.  The  President,  (&c., 
of  the  Essex  County  Baiik^  17  Mass.  479. 

§  134.  The  principal  will  be  held  liable,  not  only  for  the 
acts,  but  also  for  the  representations,  declarations,  and 
admissions  of  his  agent,  in  and  about  the  subject-matter  of 
his  agency.  These,  however,  to  be  effectual  in  charging 
him,  must  accompany  the  act,  explaining  or  qualifying  it, 
and  if  made  subsequently  by  way  of  giving  a  history  of  it, 
are  not  admissible.  They  can  only  be  admitted  as  consti- 
tuting a  part  of  the  act  itself,  and  then  only  when  the  act, 
which  they  tend  to  qualify,  is  clearly  within  the  sphere  of 
his  agency. 

§  135.  Another  mode  by  which  the  principal  may  be 
subjected  to  liability  through  an  agent  is  by  means  of  a 
notice  to  the  latter.  The  general  rule  is  that  notice  to  the 
agent  is  notice  to  the  principal;  but  in  order  to  bind  the 
latter,  it  must  relate  to  a  matter  within  the  scope  of  his 
agency,  and  to  the  very  business  in  which  he  is  engaged,  or 
is  represented  as  being  engaged,  by  authority  of  his  princi- 
pal. It  must  be  while  he  is  acting  for  the  principal,  in  the 
course  of  the  very  transaction,  which  becomes  the  subject 
of  the  suit.  Notice  to  the  cashier,  or  other  agent  of  the 
bank,  is  notice  to  the  bank,  if  given  oflGicially.    Even  the 


PKINCIPAl's  LIABILnT  EtT  PUECHASES  BY  AGENT.  63 

adoption,  by  the  principal,  of  the  act  of  an  assumed  agent, 
will  charge  him  with  the  notice  of  such  facts  as  were  witliin 
the  knowledge  of  the  agent  at  the  time  of  doing  the  act. 
As  to  the  sufficiency  of  the  notice,  the  rule  is — "  that  what- 
ever is  notice  enough  to  excite  attention,  and  put  the  party 
upon  his  guard,  and  call  for  inquiry,  is  notice  of  every 
thing  to  which  such  inquiry  might  have  led.  That,  when 
a  person  has  sufficient  information  to  lead  him  to  a  fact,  he 
shall  be  deemed  conversant  of  it." 

§  136.  There  are  several  ways  in  which  the  principal's 
liability  is  affected  in  purchases  made  by  his  agent :  as 

1.  "Where  it  is  made  by  the  agent  expressly  in  the  prin- 
cipal's name.     Then  he  alone  is  liable. 

2.  The  vendor,  knowing  the  principal,  may  choose  to 
trust  the  agent  in  preference,  and  having  thus  elected,  can- 
not afterwards  charge  the  principal. 

3.  The  agent  may  buy  for  an  undisclosed  principal — and 
then,  Avhen  discovered,  the  vendor  may  charge  eitlier  prin- 
cipal or  agent. 

4.  Tlie  vendor,  after  such  discovery,  may  lay  by  until 
after  settlement  between  principal  and  agent,  and  then  he 
can  look  only  to  the  agent. 

6.  The  vendor  may  know  that  the  other  party  is  acting  as 
agent,  hut  not  for'  lohom  /  he  may,  upon  discovery,  charge  the 
principal.     Thompson  v.  Davenport^  9  Barn,  cfc  Cress.  VS. 

6.  Payment  by  the  agent  discharges  the  principal.  But 
if  the  vendor  voluntarily  give  an  enlarged  credit  to  the 
debtor's  agent,  or  adopt  a  different  mode  of  payment,  plac- 
ing the  principal  in  a  worse  situation,  he  is  discharged. 

§  137.  If  an  agent  bo  peraiittcd  to  deal  as  if  lie  were 
the  principal,  the  party  dealing  with  him,  and  ignorant  of 
his  representative  character,  is  entitled  to  the  same  riglits 
against  him  as  if  he  were  in  fact  the  principal.  He  may 
set  off  against  the  demand  of  the  principal,  a  debt  due  from 
the  agent  to  himself.  A  purchaser  is  discharged  by  pay- 
ment to  the  agent,  unless  notice  has  been  given  by  the  prin- 


64  PEINOIPAL  AITECTED  BY  ACTS  OF  AGENT. 

cipal  not  to  pay  liim.    And  even  in  that  case,  he  is  pro- 
tected in  makinc;  payment  in  two  cases  : 

1.  Where  tlio  agent  is  acting  under  a  chl-crcdere  com- 
mission. 

2.  Wlierc  he  has  a  lien  upon  the  price  for  his  balance  of 
account. 

§  138.  As  questions  regarding  the  right  to  set  off  are  fre- 
quently arising,  it  may  be  further  stated  that  if  the  pur- 
chaser, while  negotiating  a  sale  with  the  agent,  and  at  any 
time  before  the  completion  of  the  contract  by  actual  deliv- 
ery, come  to  a  discovery  of  the  principal,  he  cannot  avail 
himself  of  a  set  off  against  the  agent.  But  his  mere  general 
knowledge  of  a  vendor  being  an  agent,  will  not  deprive 
him  of  the  privilege  of  set  off.  He  must  have  express 
knowledge  that  he  acts  as  agent  in  that  particular  instance, 
as  an  agent  who  sells  for  others  may  also  sell  on  his  own 
account.     B erring  v.  Corrie,  2  Barn.  &  Aid.  137. 

§  139.  "Where  agents  are  properly  authorized,  their  acts 
enure  to  the  benefit  of  the  party  in  whose  name  they  are 
done ;  as  a  demand,  by  a  known  agent,  or  one  who  pro- 
duces his  authority,  and  is  empowered  to  receive  the  thing 
demanded,  is  sufficient  to  maintain  an  action  of  trover.  But 
where  a  demand  is  made  by  such  a  person,  the  other  party 
has  a  right  to  be  satisfied  before  he  acts  upon  the  demand, 
and  hence  a  refusal  upon  that  specific  ground  is  justifiable. 
But  a  refusal  to  deliver  on  the  ground  of  ignorance  of  title 
in  the  party  claiming,  is  no  protection. 

§  liO.  Tlie  delivery  of  goods  to  an  agent,  for  some  pur- 
poses, vests  the  proj)erty  in  the  principal.  As  where  goods 
purchased  are  delivered  to  the  general  agent  of  the  principal, 
or  to  the  one  who  purchases  for  him,  the  right  of  stoppage  in 
transitu  in  the  vendor  is  gone,  but  not  if  they  be  delivered 
to  an  agent  merely  for  the  purpose  of  conveyance. 

§  141.  Money  paid  by  an  agent,  may  be  recovered  back 
by  the  principal  under  the  following  circumstances  : 

1.  Wliere  the  consideration  fails. 

2.  "Where  the  payment  is  through  mistake. 


DISSOLUTION   OF   AGENCY.  65 

3.  Where  illegally  extorted  in  the  course  of  his  employ- 
ment. 

4.  "Where  fraudulently  applied  by  the  agent  to  an  ille- 
gal and  prohibited  purpose. 

QUESTIONS. 
"What  may  the  principal  be  held  liable  for  ?  "What  is  the  essentia! 
thing  ?  "What  illustration  ?  "What  is  the  limitation  of  liability  as  to 
sub-agents  or  employees?  "What  is  the  liability  where  a  wrong  is 
expressly  commanded  ?  "What,  where  the  act  is  done  without  authority, 
but  within  the  scope  of  his  employment  ?  "What  seeming  departure,  and 
how  explained  ?  "What  is  the  rule  where  there  is  knowledge,  but  un- 
communicated  by  the  principal  ?  "What  the  rule,  where  injury  is  done 
to  one  agent  through  the  carelessness  of  another  ?  "What  the  rule  and 
exception  as  to  criminal  liability  ?  "What  the  rule  in  conversion  of 
property  by  agent  ?  How  are  acts  to  be  done,  to  render  him  liable  ? 
"What  is  the  liability  for  wilful  trespass  ?  How  and  when  is  the  princi- 
pal liable  for  representations,  declarations,  and  admissions  of  the  agent  ? 
How,  and  when,  and  under  what  circumstances,  is  the  principal  charge-, 
able  with  notice  to  the  agent  ?  In  what  different  ways  may  a  princi- 
pal's liability  bo  affected  in  purchases  made  by  his  agent  ?  "What  is  the 
consequence,  where  an  agent  is  permitted  to  deal  as  if  he  were  princi- 
pal ?  How,  as  to  set  off?  "When  is  the  purchaser  not  discharged  by 
payment  to  the  agent  ?  "When  not  protected  in  such  case  ?  "When  the 
principal  is  discovered  before  delivery  to  the  agent,  what  effect  has  it  on 
a  set  off?  "What  effect  has  mere  knowledge  of  the  other  party  being 
agent  ?  To  whose  benefits  do  agents'  acts  enure  ?  "What  instance  ?  Of 
what  may  the  other  party  be  satisfied,  when  a  demand  is  made  ?  For 
what  purpose  does  delivery  to  the  agent  vest  the  property  in  the  princi- 
pal? "When,  and  under  what  circumstances,  can  money,  paid  by  an 
agent,  be  recovered  back  by  the  principal  ? 

PART  VI. 

DISSOLTJTION   OF   AGENCY. 

§  142.  There  are  various  modes  of  terminating  agency, 
as — 

1.  By  its  own  Hmitatiou,  ■u-hicli  may  be  either  express 
or  implied.  It  is  ex])rcss  when  the  power  extends  to  a 
particular  period  of  time.  On  its  arrival  the  power  termi- 
5 


66  DISSOLUTION   OF   AGENCY. 

nates.     There  is  an  implied  termination  when  the  business 
is  completed,  which  the  agent  was  constituted  to  perfonn. 

2.  By  such  a  change  in  the  condition  of  the  principal  as 
will  render  its  continuance  impossible  ;  such  as — 

(1.)  The  becoming  bj«\lvrupt ;  but  this  does  not  extend  to 
an  authority  to  do  a  mere  formal  act,  which  passes  no 
interest,  and  which  the  bankrupt  himself  might  have  been 
compelled  to  execute. 

(2.)  A  feme  sole  becoming  a  married  woman. 

(3.)  The  becoming  insane,  but  the  fact  of  the  existence  of 
the  insanity  should  be  previously  established  by  inquisition, 
before  it  controls  the  operation  of  the  power. 

3.  By  such  change  in  the  character  of  the  agent,  as 
would  have  the  like  eifect ;  such  as — 

(1.)  The  bankruptcy  of  the  agent. 

(2.)  The  insanity  of  the  agent. 

(3.)  The  marriage  of  the  agent,  she  being  a  feme  sole,  when 
appointed. 

(4.)  The  renunciation  by  the  agent ;  but  in  such  case  he 
must  give  notice  to  his  principal,  or  he  is  answerable  for  all 
damages  the  principal  may  be  subjected  to  in  consequence. 

4.  By  revocation  by  the  principal.  A  naked  power  of 
attorney  or  other  agency  not  coupled  with  an  interest,  is  in 
its  nature  revocable  at  any  time,  and  this  may  be  done  at 
any  moment  before  the  actual  consummation  of  the  matter 
by  the  agent.  But  a  question  may  arise  as  to  the  conse- 
quences of  the  revocation,  or  the  right  to  revoke  without 
incurring  a  liability.  If  the  authority  admits  of  severance, 
or  of  revocation  as  to  the  part  unexecuted,  either  as  to  the 
agent  or  third  persons  ;  then  the  revocation  will  be  good  as 
to  the  part  unexecuted,  but  not  as  to  that  already  performed. 
But  if  not  severable,  and  the  agent  will  sustain  damage 
in  consequence  of  the  part  execution  of  the  authority  ; 
then  the  principal  cannot  revoke  the  part  unexecuted, 
without  fully  indemnifying  the  agent.  The  revoca- 
tion of  the  authority  of  the  principal  agent  operates  as  a 


DISSOLL'TIOX   OF   AGENCY.  67 

revocation  of  the  authority  of  all  his  sub-agents,  substitutes, 
or  employees.  There  may  be  also  an  incidental  revocation, 
as  M'here  subsequent  and  inconsistent  instructions  are  given 
to  the  agent.  There  are  two  cases  in  which  this  power  of 
reA^ocation  cannot  be  exercised,  uf^ss  the  right  is  reserved 
in  the  contract  out  of  which  the  agency  arises.    These  are — 

(1.)  Where  it  is  coupled  with  an  interest ;  that  is,  where 
the  grantee  has  an  interest  in  the  estate,  as  well  as  in  the 
exercise  of  the  power. 

(•2.)  Where  the  power  of  attorney  is  part  of  a  security  for 
money. 

5.  By  the  death  of  the  principal.  Here  two  questions 
of  great  interest  and  importance  present  themselves  : 

(1.)  When  does  the  revocation  take  effect :  at  the  period 
of  death,  or  when  notice  of  it  is  brought  home  to  the  agent 
and  parties  dealing  with  him  ?  The  common  law  settles  it  to 
be  at  the  period  of  death.  Illustration — The  family  of  A 
is  supplied  with  necessaries  by  B»  A  goes  abroad,  leaving 
his  wife  authority  to  contract  with  B,  and  dies.  B  continues 
his  supply  of  goods  until  notice  of  the  death  of  A  arrives. 
Held,  the  wife  was  not  liable  as  she  was  blameless,  and  the 
revocation  was  the  act  of  God.  Conceded  also,  that  the 
executors  of  the  liusband  were  not  liable,  the  death  being  a 
revocation  of  the  agency.  Il^o  one  was  liable  on  the  con- 
tract. Smont  V.  Jeberry,  10  Meeson  &  Welsby,  1.  A  dif- 
ferent rule  is  established  iu  Pennsylvania  in  Cassidy  v.  Mc- 
Kenzie,  4  Watk  <&  Serg.  282,  in  which  the  broad  principle 
is  assumed  that  the  determination  of  an  agency  by  death, 
like  an  express  revocation,  takes  effect  only  from  the  time 
of  notice. 

(2.)  "What  effect  has  the  revocation  by  deatli  when  the 
power  is  coupled  with  an  interest — that  is,  an  interest  in  the 
thing  itself.  Tlie  following  test  is  laid  down  by  Ch.  J. 
Marshall  in  Hunt  v.  Rousmainier,  8  Wheatoii,  174.  If  the 
interest  or  title,  originally  vested  in  the  principal,  remains 
there  after  the  power  is  executed,  so  that  every  thing  must 


68  DISSOLUTION   OF  AGENCY. 

continue  to  be  done  in  his  name,  then  it  must  die  with  the 
person  giving  it.  I3ut  if  such  interest  or  title  passes  with 
the  power,  and  vests  in  the  person  by  whom  the  pOwer  is  to 
be  exercised,  tlicn  such  person  acts  in  his  own  name,  is  no 
longer  a  substitute  for  dl^ther,  and  the  death  of  the  person 
executing  the  i)ower  does  not  revoke  it.  Another  test  is  the 
connecting  the  power  with  the  indemnity  of  the  agent.  In- 
stance :  The  principal,  going  abroad,  gives  the  agent  full  and 
entire  possession  and  control  of  his  property,  with  power  to 
sell  all  or  any  part  of  the  stock  and  property  which  might 
be  in  his  hands,  and  apply  the  proceeds  to  the  payment  of  a 
note  endorsed  by  the  agent  and  a  third  person.  The  agent 
has  a  power,  coupled  with  an  interest,  which  survives  upon 
the  death  of  the  principal.  Kna'pp  v.  Alvord,  10  PaigOy 
205. 

QUESTIONS. 

What  is  the  first  mode  specified  by  which  agency  may  be  tenninated? 
In  what  two  ways  ?  What  the  second  mode  ?  In  how  many  different 
ways  ?  What  the  third  mode  ?  In  how  many  different  ways  ? 
What  is  to  be  done  in  case  of  renunciation  ?  And  at  what 
risk  omitted  ?  What  is  the  fourth  mode  ?  What  the  consequences  of 
revocation  ?  How  where  authority  admits  of  severance  ?  How  where 
not  severable,  and  the  agent  will  sustain  damage  ?  What  effect  has  a 
revocation  of  the  authority  of  the  principal  agent  ?  Can  there  be  an 
incidental  revocation,  and  how  ?  In  what  two  cases  is  there  no  power  of 
revocation  without  a  reserved  right  ?  What  the  fifth  mode  of  revoca- 
tion ?  What  the  first  question  there  presented  ?  What  is  the  rule  of 
revocation  as  to  time  in  case  of  death  of  principal?  What  the  rule  of 
the  Common  Law  ?  What  that  in  Pennsylvania  ?  What  is  the  second 
question  presented  ?  What  is  the  first  test  laid  down  by  Ch.  J.  Mar- 
shall ?    What  the  second  laid  down  by  Chancellor  Walworth  ? 


BOOK  III. 
RIGHTS. 


FIRST  DIVISION— RIGHTS  RELATING  TO  THE  PERSON. 


CHAPTER  I. 

OF  CONTRACT. 


This  involves  three  general  inquiries :  1.  Hoio  made. 
2.  How  construed.     3.  How  jperformed. 

^\iQ  first  seeks  to  ascertain  what  a  contract  is, — what  are 
its  elements,  and  what  their  combination  so  as  to  make  a 
perfect  contract. 

The  second^  what  kind  of  construction  shall  be  adopted 
to  give  it  the  most  complete  effect. 

The  third.,  what  are  the  defences  that  will  establish  its 
complete  performance. 

PART  I. 

CONTRACT  AND  ITS  ELEMENTS. 

§  143.  A  simple  contract  is  "  An  agreement^  upon  suffi- 
cient consideration,  to  do,  or  not  to  do,  a  particular  tJiing.''^ 
This,  on  its  first  analysis,  yields  three  elements :  1.  The 
agreement ;  2.  The  consideration ;  3.  The  thing  to  be 
done  or  omitted.  Of  tlicse,  the  first  is  a  componiid,  and 
yields  also,  upon  analysis,  three  elements,  viz. :    1.   The 


70  PKOPOSITION   AND   ACCEPTANCE. 

parties  to  tlie  agreement ;  2.  Tlie  ability  to  contract ;  and 
3.  The  assent.  So  that  we  liave  the  entii-e  simple  contract 
presented  in  fire  elements  ;  these  being  : 

1.  Tlie  parties  who  enter  into  it. 

2.  Tlieir  ability  to  make  a  binding  agreement. 

3.  The  mutual  assent,  or  union  of  minds,  of  the  contracting 
parties. 

4.  The  consideration,  or  motive,  upon  which  this  assent 
or  union  reposes. 

5.  The  thing  which  is  agreed  to  be  done  or  omitted. 

§  144.  Tlie  iirst  and  second  of  these  have  already  been 
briefly  alluded  to  imder  the  Sole  Trader.  Tlie  third  relates 
to  the  assent  or  umo7i  of  minds  of  the  contracting  ])arties^ 
and  its  mutuality.  This  is  essential  to  create  a  legal  con- 
tract. Tliere  must  be  a  clear,  definite  promise,  deliberately 
made  by  the  party  sought  to  be  charged ;  and  which  has 
been  duly  accepted  by  the  person  who  claims  the  benefit 
of  it.     • 

§  145.  With  parties  legally  competent  to  contract,  the 
first  thing  presenting  itself  on  the  part  of  one  of  them  is 
the  proposition.  This  is  a  mere  offer  or  overture,  which  is 
binding  upon  neither  so  long  as  it  remains  unaccepted.  It 
can  be  at  any  time  withdrawn,  as  there  is  no  acceptance  to 
fix  it,  and  no  consideration  to  compel  its  continuance  for  fu- 
ture acceptance. 

§  146.  The  next  thing  in  order  is  the  acceptance.  In 
this  is  found  the  assent,  the  union,  the  meeting  of  the  minds 
of  the  contracting  parties  in  reference  to  the  subject-matter 
of  the  contract.  It  is  entirely  immaterial  by  what  signs  or 
indications,  whether  by  words,  by  writing,  by  silence,  by 
shaking  hands,  or  by  whatever  else,  such  acceptance  is  evi- 
denced. The  fact,  however  established,  will  necessarily 
draw  after  it  the  legal  consequence. 

§  147.  Where  a  promise  merely  is  made  on  each  side, 
the  two  must  be  concurrent  and  obligatory  at  the  same  time 
upon  each,  or  it  will  be  binding  upon  neither.     ZTtica  (& 


CONTEACT   "WIIEN   COMPLETED   BY   LETTER.  Tl 

Schenectady  Railroad  Company  v.  Brinkerhoof^  21  Wend. 
139.  Lester  v.  Jewett,  12  Barl.  502.  This,  under  recent 
decisions,  requires  the  following  modification  ;  viz. :  If  an 
agreement  be  optional  as  to  one  of  the  parties,  and  obliga- 
tory as  to  the  other,  it  does  not  destroy  its  mutuality,  if  there 
be  a  suflficient  consideration  on  both  sides  ;  as  if  one  party 
stipulates  that  he  will  deliver  salt  when  called  on,  and  the 
other  that  he  will  pay  for  the  salt  so  delivered.  Tliis  is 
mutuality,  and  one  promise  is  in  consideration  of  the  other. 
See  in  illustration  L^ AmoiLreiix  v.  Gould.,  3  Seld.  319. 

§  149.  Where  the  proposition  is  verbal,  and  no  stipula- 
tion as  to  time  of  acceptance,  in  order  to  bind,  it  should  be 
accepted  on  the  spot.  There  is  nothing  to  enforce  the  con- 
tinuance of  the  proposition. 

§  150.  A  question  of  much  doubt  and  difficulty  in  it* 
settlement  is  presented  in  what  is  termed  the  refusal  ques- 
tion. One  obtains  from  another  the  refusal  of  certain  goods 
at  a  certain  price  until  a  certain  future  period  of  time,  and 
the  question  is  whether  such  a  contract  is  binding  on  both 
parties,  and  whether  the  would-be  purchaser,  on  tendering 
the  price  within  the  time,  is  entitled  to  the  goods.  The 
better  opinion  seems  to  be  that  he  would  not,  if  the  other 
party  had,  in  the  mean  time,  withdi'awn  his  proposition  and 
sold  the  goods. 

§  151.  Another  question  of  vital  importance  to  the  mer- 
chant relates  to  the  precise  point  of  time  at  which  the  minds 
of  the  contracting  parties  meet,  and  the  contract  becomes 
complete  where  the  negotiations  are  conducted  by  letter.  A 
person  in  Albany  offers,  by  letter,  to  sell  to  a  person  in  Balti- 
more certain  goods  on  certain  terms.  The  letter  reaches  Balti- 
more on  the  third  day.  Tlie  party  to  whom  it  is  directed, 
on  the  same  day  writes  and  mails  a  letter  of  acceptance. 
But  the  writer  in  Albany,  on  the  day  after  he  had  written 
and  mailed  his  first  letter,  writes  and  mails  a  second,  re- 
voking his  former  offer.  Tlie  gentleman  in  Baltimore  re- 
ceives it  the  day  after  he  has  sent  his  letter  of  acceptance. 


Tti  EXCEPTIONS   TO   MUTUALITY   OF   ABSENT. 

Tlic  question  is  :  Arc  tliu  goods  sold  ?  Answer.  Tlicy  are. 
Tlie  offer  goes  with  tlie  letter,  and  is  a  continuing  offer  un- 
revoked to  the  knowledge  of  the  other  party  until  its 
acceptance.  A  telegraphic  revocation,  arriving  before 
acceptance,  would,  have  destroyed  the  proposition,  and 
hence  prevented  the  acceptance.  But  no  such  means  being 
resorted  to,  the  letter  carries  the  offer  to  tlie  other  party, 
who  has  a  right  to  presume  its  continuance,  and  by  his  ac- 
ceptance transform  it  into  a  valid  contract.  Mactier  v. 
Frith,  6  Wend.  103  ;    Vassar  v.  Camp,  1  Ami.  441. 

§  152.  Tlie  acceptance,  to  complete  the  contract,  must 
be  in  the  very  terms  of  the  proposition.  Any  variation 
would  render  it  a  new  proposition,  instead  of  an  acceptance 
of  a  former  one.  A  good  test  of  the  sufficiency  of  a  contract 
is  that  it  be  so  certain  and  complete  that  each  party  may 
have  an  action  uj)on  it  as  to  those  things  that  are  for  his 
own  benefit. 

§  153.  There  are  four  exceptions  to  the  rule  requiring 
mutuality  of  assent  and  obligation  on  the  part  of  contracting 
parties : 

1.  An  offer  of  reward.  Here  the  contract  performance  of 
that  which  entitles  to  the  reward,  gives  the  legal  right  to  it 
.without  any  previous  acceptance  or  promise  of  performance. 

2.  An  infant,  with  some  qualifications,  may  hold  the 
other  party  to  the  performance  of  his  contract,  while  he  can 
set  up  his  infancy  as  a  defence  to  an  action  brought  against 
himself. 

3.  A  person  induced  through  fraud  to  enter  into  a  con- 
tract, may  have  a  remedy  against  the  other  party,  while  the 
law  gives  him  a  perfect  defence  to  any  action  upon  it,  brought 
by  the  person  who  has  perpetrated  the  fraud. 

4.  Tliose  contracts  required  by  the  statute  of  frauds  to 
be  in  writing,  signed  by  the  party  to  be  charged,  admit  of  a 
remedy  against  the  parties  signing,  while  they  deny  any 
against  the  one  wlio  has  failed  to  do  so. 

§  154.  The  law,  however,  never  requires  exjyress  msent. 


EXPRESS  AJSTD  IMPLIED  ASSENT.  V3 

It  is  Batisfied  with,  sucli  as  may  be  implied  from  the  circmn- 
stances  of  the  case.  It  will  always  raise  an  implied  con- 
tract, where  reason  and  justice  unite  in  demanding  it.  One 
accepts,  or  with  full  knowledge  of  all  the  circumstances 
under  wliich  they  were  performed,  deliberately  avails  him- 
self of  the  benefit  of  services  rendered  him  by  another, 
without  any  previous  authority  or  request.  This  will  imply 
an  assent  to  pay  for  them  a  reasonable  compensation.  Tlie 
principle  is  carried  further  ;  and  where  a  party  accepts  an 
agreement  from  which  he  is  to  receive  a  benefit,  when  he 
shall,  on  or  before  a  certain  day,  have  performed  a  certain 
act,  it  is  held  iA  law  an  implied  promise  to  perform  the  act 
by  the  time  stated. 

§  155.  But  the  law  will  never  imply  an  assent  or  prom- 
ise where  there  is  an  express  one,  nor  even  against  express 
declarations  made  at  the  time  by  the  party  sought  to  be 
charged.  But  it  will,  under  some  circumstances,  imply  an 
assent  and  promise  where,  in  fact,  none  ever  existed.  A, 
for  instance,  takes  the  goods  of  B,  and  converts  them  to  his 
own  use.  B  brings  an  action  for  the  price,  as  upon  a  con- 
tract of  sale.  A,  although  never  intending  to  pay,  is  pre- 
cluded from  setting  up  in  defence  his  own  tort  or  wrong, 
and  hence  is  held  bound  to  answer  for  theii*  true  value. 

§  156.  The  well-settled  usage  or  custom  of  trade,  affects 
difierently  express  and  implied  assent.  "With  the  first  men- 
tioned, it  has  nothing  to  do.  The  express  stipulations  of  the 
parties  are  binding  uj)on  them,  whatever  custom  or  usage 
may  exist  to  the  contrary.  But  iniplied  assent  is  always 
held  to  be  modified  by  usage  or  custom,  because  it  is  pre- 
sumptively held  to  be  given  in  reference  to  it.  But  to  ena- 
ble such  usage  or  custom  to  exercise  this  modifying  ejffect, 
it  is  necessary  either  that  both  parties  should  have  had  notice 
of  it,  or  that  it  be  so  general,  and  long  continued,  that  botli 
may  fairly  be  presumed  to  have  known  it. 


7-4  ANALYSIS  OF  CONSmEEATION. 

QUESTIONS. 

"What  is  a  simple  contract?  What  is  yielded  on  its  first  analysis! 
What  on  its  second  ?  Wliat  is  essential  in  reference  to  the  third  element? 
What  is  the  first  tiling  presenting  itself?  What  is  this,  and  what  can  be 
done  with  it?  What  the  next?  How  indicated?  Where  there  is  a 
promise  only  on  each  side,  what  is  necessary  to  render  them  binding  ? 
What  modification  ?  Where  the  proposition  is  verbal,  wliat  is  necessary  ? 
What  is  the  refusal  question,  and  how  settled  ?  What  completes  and 
renders  binding  the  contract  when  the  negotiation  is  by  letter  ?  How 
must  the  acceptance  be  to  render  it  complete  ?  WTiat  four  exceptions  to 
the  rule  requiring  mutuality  of  assent  ?  What  may  supply  the  place  of 
express  assent  ?  When  does  the  law  raise  an  implied  contract  ?  What 
does  the  usage  or  custom  of  trade  afiect  ?  What  necessary  in  regard  to 
such  usage  or  custom  ? 

FOUETII   ELEMENT CONSIDEEATION. 

§  157.  Tlie  fourth  element  in  tlie  perfect  contract  is  the 
consideration  upon  which  the  assent  must  be  based,  and 
•without  which  it  is  of  no  legal  effect.  The  main  inquiries 
here  are : 

1.  What  is  it  ?  and 

2.  What  the  test  of  its  sufBciency  ? 

§  158.  The  consideration  is  the  reason^  motive^  or  induce- 
ment, upon  the  strength  of  which  both  parties  consent  to  be 
bound.  It  may  be  either,  1.  Good,  or  2.  Valuable.  The 
first,  consisting  in  blood  relationship,  natural  love  and  af- 
fection, is  good  only  as  between  the  parties,  sustaining  as 
to  them,  contracts  already  executed.  The  second,  consisting 
of  something  of  value  to  be  paid  or  done,  or  of  some  incon- 
venience to  be  suffered,  makes  it  a  valid  contract  everywhere, 
and  as  against  all  parties. 

§  159.  Tlie  test  of  its  sufficiency  will  be  found  in  the 
analysis  and  ascertainment  of  its  elements.  Tliese  are  two 
in  number : 

1.  A  hencfit  to  \he. promissor,  or  party  promising. 

2.  A  loss  or  ijiconvenience  to  the  promisee  or  party 
promised.    Either  one  of  these  is  sufficient,  and  hence  if  the 


eUFFICIENCY  OF  CONSroEKATION'.  75 

contract  discloses  that  the  party  promising  derives  any 
benefit,  or  the  party  promised  sustains  any  loss,  it  cannot  be 
pronounced  defective  in  point  of  consideration.  Both  the 
benefit,  and  the  loss  or  inconvenience,  may  be  very  slight, 
and  yet  be  legally  sufiicient,  as  the  law  leaves  the  extent  of 
both  to  the  judgment  of  the  parties.  Where  a  debt  is 
claimed,  and  a  promise  is  made  to  pay  it  if  the  party  claim- 
ing will  make  affidavit  of  its  existence  and  amount,  and  he 
does  so,  that  is  held  a  sufficient  consideration  to  support  the 
promise.  Even  if  a  person  becomes  a  party  to  an  agreement 
from  which  he  receives  no  benefit,  yet  if  it  be  such  as  the 
other  would  not  have  entered  into,  unless  he  had  become 
such  party,  it  is  a  sufficient  consideration  to  bind  him  to  his 
promise. 

§  160.  A  question  of  great  practical  importance  has 
arisen  as  to  how  far  the  intrusting  a  person  loith  property  is 
in  itself  a  consideration  to  support  a  promise  to  perform  the 
trust.  It  is  weU  settled  that  a  non-feasance^  or  the  not  doing 
of  that  which,  without  any  consideration,  was  undertaken 
to  be  done,  can  give  no  cause  of  action.  A  party  volun- 
tarily promises  to  get  a  vessel  insured,  but  neglects  to  do  so, 
and  the  vessel  is  lost.  There  is  no  cause  of  action,  because 
no  consideration.  But  where  one  party  is  retained  by 
another,'  although  without  consideration,  and  enters  upon 
the  performance  of  the  work  or  undertaking,  and  through 
his  negligence  an  injury  is  effected,  that  is  a  inisfcasance^ 
and  the  party  is  liable.  So  also  when  one  undertakes  to 
perform  the  trust,  and  receives  the  property  in  relation  to 
which  it  is  to  be  performed,  thus  entering  upon  its  perform- 
ance /  such  receipt  is  regarded  in  the  nature  of  a  considera- 
tion, and  creates  a  liability  if  it  be  so  improi)crly  performed 
as  to  be  productive  of  injury  to  tlie  other  party.  Coggs  v. 
Bernard^  2  Ld.  Raymond^  909.  Rutgers  v.  Lucet^  2  John. 
Cos.  92. 

§  101.  Another  question  has  arisen  regarding  the  suffi- 
ciency of  a  2-^i'omise  as  a  consideration  to  sujjport  a  promise. 


7G  SUFFICIENCY   OF   C0N8IDEKATI0N. 

In  case  of  mutual  submission  of  difforcnecs  to  arbitration, 
the  mutuality  of  the  promises  embraced  iu  tlic  suljmission 
will  uphold  and  support  the  proiriisc  of  each.  So,  also,  a 
mere  promise  to  do  an  act  at  a  future  jjcriod  is  a  sufficient 
consideration  to  sustain  an  engagement  on  the  part  of  the 
other  party,  or  a  promise  on  his  part  to  do  an  act  in  the 
future.  Tlie  principle  of  liability  is  mutuality  of  obligation. 
Unless  both  are  bound  in  all  such  cases,"  neither  can  be. 
Mutual  promises  to  marry  are  binding,  and  support  each 
other  upon  this  principle — the  one  forming  the  consideration 
for  the  other. 

§  162.  Another  matter  that  has  been  dra\m  in  question 
is  the  sufficiency  o^ pre-existing  moral  obligation  as  a  consid- 
eration to  support  a  promise.  *  Tlie  rule  here  is  that  a  mere 
moral  obligation  to  pay  a  debt  or  perform  a  duty  is  a  suffi- 
cient consideration  to  support  an  express  promise^  although 
there  existed  at  the  time  no  legal  liability.  A  familiar  in- 
stance of  this  occurs  where  a  debt  has  once  existed,  but  to 
the  payment  of  it  may  be  interposed  the  defences  of  the 
statute  of  limitations,  infancy,  or  a  discharge  under  an  in- 
solvent law.  In  all  such  cases  an  express  promise^  without 
any  new  consideration,  restores  the  legal  remedy. 

§  1G3.  Another  point  regards  the  sufficiency  oi  forbear- 
ance to  prosecute  or  press  the  collection  of  a  debt  due,  as  a 
consideration  to  support  a  promise.  The  rule  here  is,  that 
an  agreement  to  forbear  for  a  certain,  definite,  or  reasonable 
time,  to  prosecute  a  well-founded  legal  or  equitable  demand, 
is  a  sufficient  consideration  to  support  a  promise  on  the  part 
either  of  the  debtor,  or  of  a  third  person. 

§  164.  No  promise  can  be  legally  enforced  that  is 
founded  either  upon  no  consideration,  or  even  upon  what  is 
technically  termed  a  good  consideration.  The  following  are 
instances  in  illustration :  The  master  of  a  ship  promises  his 
crew  an  addition  to  their  fixed  wages  in  consideration  of 
their  making  extraordinary  efforts  dm'ing  a  storm.  This  is 
a  gratuitous  promise,  and  not  enforceable.     A  promise  to 


SUFFICIENCY   OF  CONSIDERATION.  77 

pay  the  debt  of  another,  already  incurred,  is  gratuitous  and 
not  enforceable. 

§  165.  Suppose  the  consideration  to  be  naturally  of  im- 
possible performance,  the  contract  into  which  it  enters  can 
never  be  enforced.  No  benefit  could  ever  be  conferred  upon 
the  promissor.  The  salutary  rule  of  the  common  law  is, 
that  every  person  who,  in  consideration  of  some  advantage 
to  himself,  promises  a  benefit  to  another,  must  have  the 
power  of  conferring  that  benefit  up  to  the  extent  to  which 
it  professes  to  go. 

§  166.  The  objection,  however,  must  go  to  the  entire 
impossibility  of  performance.  And  even  that  is  insuflieient, 
if  it  applies  only  to  the  promissor  individually.  Where  a 
party  lays  a  charge  upon  himself,  he  is  bound  to  perform,  or 
respond  in  damages.  A  promises,  upon  sufiicient  consid- 
eration, to  procure  the  consent  of  his  landlord  B,  to  the 
assignment  of  a  lease.  B  declines,  and  hence  perform- 
ance cannot  possibly  be  had.  A  is  still  bound  by  his 
promise. 

§  167.  "Wliere  one  of  several  professed  considerations  is 
frivolous  and  insufficient  of  itself,  not  being  illegal^  the 
contract  is  not,  therefore,  annulled,  if  there  is  still  left  an 
adequate  consideration  to  sustain  it.  But  if  a  promise  rest- 
ing in  parol,  or  being  merely  verbal,  be  entire,  and  part  of 
it  relate  to  a  matter,  required  by  the  statute  of  frauds  to  be 
in  writing,  the  whole  would  be  void.  So,  also,  if  part  of  the 
consideration  be  illegal,  the  entire  contract  would  fail. 

§  168.  A  past,  or  executed  consideration,  is  insuflieient 
to  support  an  express  promise,  unless  it  was  moved  by  the 
precedent  request  of  the  party  promising.  In  such  case,  the 
subsequent  promise  is  linked  with  the  precedent  request, 
and  tlins  together  make  the  consideration  complete.  This 
prior  request  will  even  be  presumed  where  the  party 
promising  has  derived  a  personal  benefit  from  the  precedeut 
consideration.  A  pays  a  sum  of  money  to  a  third  ]icrson 
for  B,  without  his  knowledge  or  request.     B  subsequently 


78  ORIGINAL   AND   COLLATEKAL   ENGAGEMENTS. 

promises  payment.  A  prior  request  to  pay  it  will  be  pre- 
sumed. 

§  1G9.  A  contract,  except  in  certain  prescribed  cases, 
may  be  either  in  writing,  or  may  be  merely  verbal,  and  in 
cither  case  is  subject  to  the  same  rules.  The  difference  lies 
only  in  the  evidence  by  which  it  is  established.  In  the  one 
case  it  is  the  production  of  the  writing  and  tlie  proof  of 
signature.  In  the  other  the  negotiations  embodying  the 
agreement.  If  put  in  writing,  no  set  form  of  words  is 
necessary,  but  great  care  must  be  taken  to  include  in  the 
writing  all  the  stipulations  that  enter  into  and  form  a  part 
of  the  contract.  A  contract  is  not  susceptible  of  being  fully 
proven,  that  exists  partly  in  writing  and  partly  in  parol,  be- 
cause as  the  parties  have  chosen  to  make  the  former  the  evi- 
dence of  it,  and  that  being  the  highest  evidence,  neither  one 
of  them  can  resort  to  any  other  evidence.  Hence  the  verbal 
part  is  excluded. 

§  lYO.  Tliere  is  an  extensive  class  of  contracts,  which 
the  statutes  enacted  in  most  of  the  States  for  the  prevention 
of  fraud  and  perjury  require  to  be  in  writing,  and  signed 
by  the  party  to  be  charged.  "Within  this  class  are  included 
all  undertakings  to  answer  for  the  deht,  default  or  miscar- 
riage of  another  jper son.  This  is  held  to  apply  only  to  col- 
lateral engagements^  or  to  those  where  there  already  exists  a 
debt  or  legal  liability  on  the  part  of  the  third  person.  It 
has  no  application  to  the  cases  where  there  is  an  original 
promise  made  at  the  time  of  the  creation  of  the  debt  or  duty, 
and  where  the  credit  is  given  to  the  promissor.  A  requests 
B  to  sell  and  deliver  to  C  certain  goods,  and  he  will  see  that 
the  same  are  paid  for.  This  is  an  original  promise,  not 
■Within  the  statute,  and  need  not  be  in  writing  to  be  en- 
forced. C,  having  purchased  certain  goods  of  B,  and  pay- 
ment for  the  same  being  demanded,  A  requests  B  to  give  to 
C  a  further  tenn  of  credit,  and  he  will  see  that  the  goods 
are  paid  for.  This  is  a  collateral  undertaking,  is  within  the 
statute,  and  must  be  in  writing  to  be  legally  enforced.     The 


TESTS   OF  OKIOmAL  AITD  COLLATEEAL    ENGAGEMENTS.      79 

necessity  for  a  consideration  exists  as  well  in  one  case  as  in 
the  other. 

§  171.  One  excellent  test  to  determine  whether  the  en- 
gagement is,  or  is  not,  collateral,  is  to  ascertain  to  whom  the 
credit  was  given,  to  whom  the  charge  was  made  by  the 
Tender — upon  whose  responsibility  he  parted  with  the 
goods.  Tliis  the  account  books  of  the  vendor  will  generally 
show.  The  rule  is,  that  if  the  person  for  whose  use  goods 
are  fmnished  Ije  liable  at  all,  then  the  engagement  of  that 
other,  although  it  formed  the  chief  inducement  to  supply 
the  goods,  is  collateral,  and  hence  within  the  statute. 

§  172.  If,  however,  a  promise  to  pay  the  debt  of  another, 
be  founded  on  some  new  and  distinct  consideration,  wholly 
independent  of  the  debt,  and  one  moving  between  the  par- 
ties to  the  new  promise,  as  where  property  of  the  debtor  is 
assigned  to  one  in  consideration  of  such  promises,  it  is  not 
within  the  statute,  but  is  regarded  as  an  original  under- 
taking.    Leonard  v.  Yredenhurgh,  8  John.  29. 

§  173.  Another  test  which  is  applied  to  determine  the 
original  or  collateral  character  of  the  engagement,  is  to 
examine  the  effect  of  the  new  agreement,  and  if  it  be  such 
as  to  destroy  or  discharge  the  original  demand,  it  is  not 
within  the  statute.  The  original  vendee  of  goods,  being 
unable  to  pay  for  them,  transfers  them  to  another,  with  the 
assent  of  the  vendor,  to  whom  that  other  promises  payment. 
By  this  substitution,  the  debt  of  the  original  vendee  is  dis- 
charged, and  the  new  undertaking  assumes  therefore  an 
original  character.  But  in  this  entire  class  of  cases,  the  new 
and  original  consideration  must  be  such  as  to  shift  the  actual 
indebtedness  to  the  new  promissor,  so  that  if  any  relations 
are  left  between  him  and  the  original  debtor,  the  latter  shall 
become  merely  a  surety  for  the  performance  of  the  other. 
Kingley  v.  Balcome,  4  Barb.  S.  C.  Rep.  131. 

§  174.  The-  writing  in  order  to  comply  with  the  statute, 
must  state  both  the  consideration  and  the  promise,  and  be 
signed  by  the  party  who  is  sought  to  be  charged.    The  in- 


80  ILLEGAL   CONTRACTS. 

sertion  of  tlic  words  "  value  received,"  is  a  sufficient  state- 
ment of   consideration.     Watson  v.  McLaren,  19  Wend. 

55Y. 

QUESTIONS. 

"What  are  the  inquiries  as  to  consideration  ?  "What  is  a  considera- 
tion ?  Of  what  kinds  ?  What  a  good  consideration  ?  What  a  valuable 
one  ?  What  the  two  elements  of  the  consideration  ?  What  as  to  their 
extent?  What  illustrations?  What  is  the  difference  between  non-fea- 
sance and  mis-feasance  ?  Does  cither  and  which  create  a  liability  ?  Un- 
der what  circumstances  may  one  promise  be  the  consideration  for 
another  ?  What  illustration  ?  How  is  pre-existing  moral  obligation  as  a 
consideration  for  a  promise  ?  What  will  restore  a  legal  remedy  where  it 
exists  ?  When  is  forbearance  a  suflScient  consideration  ?  When  cannot 
a  promise  bo  enforced  ?  What  illustration  ?  How  when  performance  is 
naturally  impossible  ?  Why  cannot  such  promise  then  be  enforced  ? 
How  far  must  the  objection  go  ?  How  when  applied  to  promissor  indi- 
vidually ?  What  illustration  ?  What  is  the  rule  when  one  of  several  con- 
siderations, not  illegal,  is  frivolous  and  insufficient?  What  exception? 
Wlien  is  a  past  or  executed  consideration  sufficient  ?  And  how  made  so  ? 
WTien  presumed ?  What  illustration?  How  may  contracts  be  made? 
How  proved  ?  What  difficulty  where  a  contract  is  partly  in  writing  and 
partly  verbal  ?  What  undertaking  is  within  the  Statute  of  Frauds  ? 
What  does  this  apply  to  ?  To  what  has  it  no  application  ?  What  illus- 
trations of  each  ?  What  the  first  test  mentioned  ?  What  the  rule  of 
liability  ?  How  when  founded  upon  some  new  consideration  independ- 
ent of  debt?  What  another  test  mentioned?  What  illustration? 
What,  in  such  case,  must  the  new  consideration  do  ?  What  must  tho 
writing  state  to  comply  with  the  statute?  By  whom  signed?  WTiat 
the  effect  of  inserting  "  value  received  "  ? 

FIFTH    ELEMENT. — THE    THING    TO   BE    DONE   OR   OiUTi'EU. 

§  175.  This  involves  the  question  of  legality,  and  hence 
a  reference  to  that  class  of  contracts  termed  illegal.  The 
general  rule  here  is,  that  no  court  will  lend  its  aid  to  a  man 
who  founds  his  cause  of  action  upon  an  immoral  or  an  ille- 
gal act.  But  that  immoral  or  illegal  character  is  never  pre- 
sumed. It  is  the  subject  of  averment  and  proof;  and  where 
the  contract  is  for  the  performance  of  an  act  which  may  be 
effected  by  means  that  are  lawful  or  unlawful,  the  law  will 


IMMORALITY   AIsD   PUBLIC   POLICY.  81 

presume  in  favor  of  the  former,  and  thus  sustain  the  con- 
tract. 

§  176.  Contracts  are  void  for  immorality, 

1.  Where  the  consideration  embraces  future  illicit  co- 
habitation between  the  parties.  Past  cohabitation  has  for- 
merly been  deemed  a  sufficient  consideration,  but  a  recent 
decision  in  England  pronounces  that  also  void.  Beaumont 
V.  Eeeve,  8  Ad.  &  El.  N.  S.  483.  So  that  the  ndc  is  noM- 
understood  to  be  limited  "to  those  cases  where  a  prior  legal 
obligation  or  consideration  had  once  existed.  ISTo  recovery 
can  be  had  for  the  rent  of  tenements  knowingly  let  for  the 
purpose  of  prostitution,  or  even  where  they  are  employed 
for  such  pui-pose  with  the  knowledge  of  the  lessor. 

2.  "Where  the  consideration  is  a  bet  or  wager.  At  com- 
mon law,  all  such  bets  and  wagers  are  void,  as 

1.  Contravene  public  policy  or  morality,  or  tend  to  the 
detriment  of  the  public,  or 

2.  Aifect  the  interest,  feelings,  or  character  of  a  third 
person. 

§  177.  Another  extensive  class  of  contracts  rendered 
void  at  common  law  are  those  injuriously  affecting  fvMic 
policy.     Such  arc  all  those  that, 

1.  Are  in  general  restraint  of  trade.  The  public  has  an 
interest*  both  in  the  services  of  the  citizen,  and  in  guaran- 
teeing to  him  the  perfect  liberty  of  carrying  on  the  trade  or 
business  in  which  he  has  been  educated,  as  a  means  of  sus- 
taining himself  and  family.  Hence  the  well-settled  princi- 
ple of  common  law,  that  a  contract  by  which  a  party  stipu- 
lates, although  for  a  consideration,  either  not  to  carry  on  a 
special  trade  or  branch  of  business  anywhere,  or  not  to 
carry  on  any  business,  is  illegal  and  void.  But  a  contract 
ill  partial  restraint,  as  where  it  is  limited  to  specified  places, 
or  beyond  a  certain  distance,  or  with  particular  persons, 
may  be  sustained.  A  difficulty  arises  in  the  application  of 
the  rule.  jSTo  precise  limits  of  restraint  can  ever  be  laid 
down.  The  natm-e  of  the  trade  or  profession,  the  populous- 
6 


82  VOID   AS   AGAINST   PUBLIO   POLICY. 

ness  of  the  ncigliborhood,  the  mode  in  wliicli  the  trade  or 
profession  is  usiuilly  carried  on,  cacli  and  all,  together  with 
the  consideration,  are  to  be  considered.  Tlic  reasonableness 
of  the  limitation  is  a  question  of  law,  and  must  be  shown 
aflfirmativelj,  as '  the  legal  presumption  is,  tliat  all  such 
restraints  are  void.     CJiapinl  v.  Brockway,  21  Wend.  157. 

2.  Contracts  contravening  the  policy  of  insolvent  acts. 
A  contracts  with  B  to  pay  him  such  a  sum  of  money,  in 
consideration  that  he  will  withdraw  all  o^Dposition  to  his 
discharge  under  the  insolvent  law.  Tliis  is  a  void  contract. 
So  also  is  an  agi-eement  in  which  the  consideration  is  the 
omission  of  the  debt  of  a  creditor  from  the  insolvent's 
schedule. 

3.  Contracts  in  restraint  of  marriage.  The  rule  is,  that 
a  contract,  the  object  or  effect  of  which  is  to  restrain  or 
prevent  a  party  from  marrying  any  person^  is  illegal  and 
void.  So. a  marriage  brokerage  contract.,  by  which  one,  for 
a  consideration,  undertakes  to  procure  a  marriage  between 
two  parties,  is  void.  Even  deeds  of  separation  between 
husband  and  wife,  are  void  under  some  circumstances,  as 
contravening  the  policy  of  marriage.  Rogers  v.  Rogers.^  4 
Paige,  510. 

4.  Contracts  preventing  or  impeding  the  course  of  public 
justice.  Illustrations  :  Agreements  which  have  for  their 
consideration  the  suppression  of  evidence,  the  stifling  or 
compounding  a  criminal  prosecution,  or  proceedings  for  a 
felony  or  a  misdemeanor  of  a  public  nature,  are  void  at 
common  law.  A  corporation  agi*ees  to  grant  certain  privi- 
leges to  individuals  in  consideration  that  they  withdraw 
their  opposition  to  the  passage  of  a  legislative  act,  affecting 
the  interests  of  the  coi'poration  ;  the  contract  is  void.  Pin- 
gry  v.  Washburn,  1  Aik.  264  (a).  So  also  an  attempt  to 
contravene  the  policy  of  a  public  statute,  or  that  of  an  act 
of  Congress.  A  agrees  to  give  B  $1,000,  in  consideration 
that  he  will  not  offer  himself  to  the  Postmaster  General  to 
carry  the  mail  route.     Held  void.     A  contract  to  use  per- 


CONTKACT   AS   AFFECTED   BY   FEArD,  83 

sonal  influence  to  procure  the  passage  of  a  legislative  act  is 
void.     Jiose  &  Haioley  v.  Truax^  21  Barb.  361. 

§  178.  Fraud  is  another  disturbing  element  that  maj 
render  void  all  contracts  into  which  it  enters.  This  may  be 
defined :  the  wilful  adoption  and  use  of  any  means  or  ex- 
pedients with  the  intent  to  deceive  another  to  his  injury. 
The  general  rale  is  :  that  it  avoids  all  contracts,  both  at  law 
and  in  equity,  whether  the  object  be  to  deceive  the  public, 
or  third  persons,  or  the  parties  to  them.  Tliis  avoidance  is, 
from  the  beginning,  producing  the  same  eflfect  as  if  they 
never  existed. 

§  179.  Tliis  disturbing  element  extends  to  representations 
made  by  an  agent.  An  agency  may  even  be  presumed,  for 
this  purpose,  as  where  a  party  has  made  a  false  representa- 
tion to  one  person  as  an  inducement  to  a  conti'act,  and  he 
knows  that  that  person  has  stated  such  representation  to  a 
third  person,  who,  upon  the  faith  of  it,  makes  a  contract 
with  the  first  party.  Here  the  intermediate  person  may  be 
considered  an  agent  of  the  first  party  by  implication.  In 
our  jurisprudence  the  principle  has  been  carried  still  further, 
and  it  has  been  held  sufiicicnt  that  where  a  fraudulent  act  is 
done  by  a  third  person  for  the  benefit  of  a  party  who  is  at  the 
time  entirely  ignorant  of  the  act,  yet  if  he  subsequently  seeks 
to  take  advantage  of  it,  he  thereby  aflirms  it,  becomes,  in 
some  sense,  a  party  to  it,  and  thus  deprives  himself  of  all 
benefit  under  it.     Dexter  v.  Adams,  2  Denio,  6-lG. 

§  ISO.  The  contract  into  which  fraud  enters  is  only 
voidable  at  the  election  of  the  party  against  whom  it  is 
practised.  The  party  defrauding  can  never  take  advantage 
of  his  own  wrong.  And  the  party  defrauded,  if  he  elect  to 
rescind,  must  exercise  the  right  within  a  reasonable  time 
after  the  discovery  of  the  fraud.  K,  after  knowledge  that 
fraud  has  been  practised,  he  deals  with  the  subject-matter 
of  the  contract  as  his  own,  he  cannot  afterwards  avoid  it, 
even  although  he  may  subsequently  discover  further  cir- 
cumstances connected  with  the  same  fraud.     Where  the 


84:  CONTEACT  AS   AFFECTED  BY  FEAUD. 

party  defrauded  rescinds  an  express  contract,  lie  cannot  set 
up  an  im])lied  one,  and  seek  a  remedy  upon  tliat.  Where 
both  parties  have  been  guilty  of  a  fraudulent  intent,  the  law 
refuses  to  interfere,  leaving  both  as  it  found  them. 

§  181.  Although  the  rule  has  been  somewhat  fluctuating, 
yet  it  is  now  understood  that  a  material  misrepresentation, 
although  not  embodied  in  the  contract,  is  considered  a  con- 
structive or  legal  fraud,  although  made  without  any  wilful 
intention  to  deceive,  but  merely  through  carelessness,  mis- 
take, or  ignorance.  Smith  v.  liichards,  13  Peters,  U.  S. 
B.  26. 

§  182.  The  question  has  been  much  discussed,  how  far 
a  person  entirely  disinterested  may  render  himself  liable, 
for  making  a  false  and  fraudulent  representation  to  another, 
upon  the  strength  of  which  that  other,  in  acting,  sustains 
damage.  A  represents  B  as  entirely  solvent,  and  worthy 
of  credit ;  0,  acting  upon  this  representation,  trusts  B  with 
goods  upon  credit.  B  turns  out  to  have  been,  at  the  time, 
insolvent  to  the  knowledge  of  A,  and  the  debt  is  worthless. 
The  question  is  whether  C  can  recover  the  debt  thus  lost  of 
A.  Upon  proving  clearly  the  above  facts,  and  bringing 
home  to  A,  at  the  time,  the  knowledge  of  B's  insolvency, 
C  is  entitled  to  recover  of  A  the  value  of  the  goods  sold. 
Allen  V.  Adington,  1  Wend.  9  ;  also  same  case,  11  Wend. 
374. 

§  183.  It  is  a  rule  that  the  suppression  of  a  material 
fact,  which  the  party  concealing  is  legally  bound  to  dis- 
close, and  of  which  the  other  party  has  a  legal  right  to 
insist  upon  being  informed,  is  fraudulent,  and  will  invali- 
date a  contract.  This  is  confined  to  facts,  not  embracing 
opinions  or  conclusions.  A  distinction  is  here  taken  be- 
tween extrinsic  circumstances, — such,  for  instance,  as  affect 
value,  as  the  state  of  the  market — and  intrinsic,  relating  to 
the  nature  of  the  article,  its  characer  and  condition.  Li 
respect  to  the  former,  the  rule  is  that  neither  party  is 
bound  to  state  them  to  the  other,  and  mere  concealment 


COXTRACT   AS   AFFECTED   BT   FKAUD.  bO 

will  not  annul  the  contract.  Ent  the  party  practising  con- 
cealment must  neither  say  nor  do  any  thing  indicating 
assent  to  any  proposition  involving  any  mistake  by  the 
other  party.  The  part  he  performs  must  be  entirely  nega- 
tive. 

§  184.  In  relation  to  the  intrinsic^  the  rule  is :  that 
mere  silence,  as  to  any  thing  which  the  other  might,  by 
proper  diligence,  have  discovered,  and  which  is  open  to  his 
examination,  is  not  fraudulent,  unless  a  special  trust  and 
confidence  cither  exist  between  the  parties,  or  may  be  im- 
plied from  the  circumstances  of  the  case.  But  any  conceal- 
ment of  latent  defects,  more  especially  within  his  own 
knowledge,  and  which  could  not  have  been  readily  dis- 
covered by  the  other,  would  avoid  the  contract.  And 
whenever  silence  would  be  efjuivalent  to  a  misrepresenta- 
tion, or  assent  to  a  false  statement,  no  party  would  be  per- 
mitted to  be  silent ;  and  if  one  party  sliould  state  certain 
facts  in  relation  to  the  subject-matter  of  a  contract,  in 
presence  of  the  other,  and  that  other  should  be  silent  whe?. 
be  ought  to  answer,  his  silence  would  amount  to  assent,  ana. 
he  would  be  bound  the  same  as  if  he  had  made  the  state- 
ment. 

§  185.  Tlic  commission  of  fraud  upon  third  pcrsor.c 
occurs  the  most  frequently  in  two  cases. 

FirsL — in  contracts  between  insolvent  debtors,  and  certain 
of  their  creditors.  In  a  general  compromise  of  debts,  as 'the 
creditors  all  bargain  for  an  equality  of  benefit,  as  to  pay- 
ment or  security,  any  private  agreement  between  the  debtor 
and  any  creditor  who  joins  in  the  general  arrangement,  that 
he  shall  receive  more  money  or  better  security  than  thi 
others,  is  a  fraud  on  them,  and  therefore  void. 

§  186.  The  second  is  found  in  the  practice  frequently 
resorted  to,  of  employing  ly-hidders  or  j)iiffcrs  at  auction 
sales,  in  order  to  take  advantage  of  the  eagerness  of  bidders, 
and  extort  Iiigh  prices.  Two  things  arc  necessary,  to  lay  a 
foundation  for  this  species  of  fraud : 


8G  CONTRACTS    KENDEKED    VOID   BY   STATUTE. 

1.  A  secret  understanding  with  the  auctioneer,  that  they 
shall  not  he  held  to  their  Lids,  and 

2.  The  object  must  be  to  excite  competition,  to  in^ 
flate  tlic  price  by  running  up  the  property  to  a  higher 
price  tlian  it  would  otherwise  attain.  The  rule  is  :  that  if 
all  the  bidders  except  the  purchaser  were  fictitious,  or,  if 
tlie  bid  immediately  preceding  his  was  a  fictitious  one  ;  in 
either  case,  the  buyer  may  avoid  the  purchase.  But  in 
case  a  puffer  be  employed,  and  there  is  a  competition 
among  real  bidders  after  he  has  ceased  bidding,  the  sale 
cannot  be  deemed  fraudulent.  It  is  also  entirely  competent 
for  the  vendor,  previous  to  the  commencement  of  the  sale, 
to  give  public  notice  that  he  will  employ  puiFers  and  by- 
bidders,  or  he  may  order  the  goods  to  be  set  up  at  his  own 
price,  and  not  lower ;  or  he  may  previously  declare  as 
a  condition  of  the  sale,  that  he  reserves  a  bid  for  himself. 

§  187.  A  mutual  agreement  between  two,  not  to  bid 
against  each  other  at  a  public  auction,  and  that  one  shall 
buy  articles  and  divide  them  with  the  other,  is  void  as 
against  public  policy.  So  at  a  public  sale  of  property 
levied  on  by  execution,  the  forbearing  to  bid  is  an  unlawful 
consideration  for  a  promise. 

§  188.  Contracts  are  also  rendered  void  by  statute  as 
well  as  by  common  law.  All  contracts  in  violation  of  a 
statute,  either  as  to  the  consideration,  or  the  thing  to  be 
done  or  omitted,  are  utterly  void.  Although  a  party  can- 
not set  up  his  own  fraud  in  avoidance  of  his  contract,  yet 
he  can  his  own  criminality,  provided  it  consists  in  violating 
some  positive  statute  of  the  government. 

§  189.  A  distinction  formerly  prevailed  between  instru- 
ments void  in  part  hy  statute^  and  in  part  at  common  law  : 
but  the  rule  may  now  be  stated  to  be — that  if  any  part  of 
the  entire  consideration  for  a  promise,  or  any  part  of  an 
entire  prmnise^  not  in  its  nature  capable  of  separation,  be 
illegal  either  at  common  law,  or  by  statute,  the  wliole  agree- 
ment  is  void.      "Where  there  are  two  considerations  to  a 


A   LOAN   ESSEIOIAL   TO  USFKY.  87 

promise,  if  eitlier  of  them  be  unlawful,  the  promise  is  void  ; 
but  if  one  of  them  only  be  void,  the  other  will  support  a 
promise.  And  so,  also,  where  the  contract  is  to  do  two  or 
more  acts  for  a  legal  consideration,  and  one  of  them  is  void, 
and  capable  of  being  separated  from  the  others,  the  contract 
is  binding  in  respect  to  the  lawful  acts,  and  void  as  to  the 
remainder. 

§  190.  It  is  not  necessary  that  a  statute  should  directly 
prohibit  m  order  to  render  void  a  contract.  It  is  sufficient  if 
it  inflicts  a  ])cnalty  upon  the  performance  of  what  the  con- 
tract stipulates  to  be  done.  The  only  question  is,  docs  the 
statute  prohibit  the  contract  ?  The  particular  form  or  man- 
ner of  prohibition  is  not  material. 

§  191.  The  statute  bearing  upon  contracts,  which  all 
classes  of  men  are  the  most  interested  in  understanding,  is 
that  of  usuEY.  This  means  the  illegal  rent  of  money,  and 
is  embodied  in  a  contract  by  which,  on  a  loan  of  money,  a 
greater  amount  of  interest  is  reserved  for  its  use  than  is 
allowed  by  the  law  of  the  State  that  controls  the  contract. 
The  two  inquiries  that  arise  are,  "VVliat  constitutes  usury  ?  or 
when  can  a  contract  be  pronounced  usurious  ?  and  What  are 
its  consequences  when  once  established  ?  As  usury  laws  pre- 
vail in  most  of  the  States,  the  first  inquiry  may  arise,  and  be 
the  same  in  almost  or  quite  every  State  in  the  Union,  while 
the  second  will  present  an  almost  infinite  diversity. 

§  192.  It  is  essential  to  the  very  being  of  usury  that 
there  should  be  a  loan,  although  it  need  not  be  such  in 
terms,  provided  it  be  something  that  amounts  to  it.  This 
is  sometimes  concealed  under  the  cover  of  a  fictitious  sale ; 
as  where  on  A's  bemg  applied  to,  to  loan  a  sum  of  money 
at  fifteen  per  cent,  on  a  mortgage  of  land,  declined  doing  so, 
but  proposed  to  purchase  the  land  for  the  sum  mentioned, 
and  to  rent  it  to  the  horrovxr  or  vendor  for  a  rent  equivalent 
\jQ  fifteen  jper  cent,  on  the  sum  advanced,  with  a  privilege  to 
redeem  the  property  for  the  sum  advanced,  on  paying  up 
tlie  rent,  which  proposition  was  accepted.     This  was  held  a 


SS  WUAT   WILL   AND   WILL    NOT   CONSTITUTE   USURY. 

usurious  contract.  Tyson  v.  Itickard^  3  Harris  d&  Johrir 
son,  109. 

§  193.  Another  device  is  to  advance  money  and  goods 
together,  or  goods  alone,  at  a  certain  sum  specified,  and  by 
a  certain  time  a  sum  equal  to  the  price  at  which  the 
goods  are  valued,  is  to  be  returned  together  with  the  money. 
This,  if  manifestly  intended  as  a  loan,  is  usurious. 

§  194.  To  make  out  usury  it  must  be  shown  that  the 
loan  was  for  more  than  the  legal  rate  of  interest.  This  need 
not  be  in  terms,  as  a  device  may  be  resorted  to  for  the  pur- 
pose of  securing  such  illegal  rate,  as  where  a  sum  of  money 
is  loaned  at  the  legal  rate  of  interest,  but  the  lender  at  the 
same  time  compels  the  boiTOwer  to  take  of  him  a  house  at 
a  rent  far  above  its  real  value.  It  is,  however,  necessary 
to  prove  an  agreement  to  take  usurious  interest,  for  if  re- 
served by  mistake  it  is  not  usury.  But  neither  a  mistake 
nor  ignorance  of  the  law  will  excuse  a  contract  clearly 
usurious. 

§  195.  The  reserving  or  the  taking  of  compound  interest 
is  not  usurious,  but  unless  a  prior  agreement  be  made,  no 
compound  interest  is  recoverable. 

§  196.  There  may  be  a  charge  for  bona  fide  expenses 
incurred  in  and  about  eifectiag  a  loan  of  money  beyond  the 
legal  rate  of  intei-est  which  will  not  be  usurious.  JBaynes 
V."  Fry,  15  Vesey,  120.  But  a  loan  must  not  be  mixed  up 
with  the  transactiou,  nor  the  compensation  demanded  be 
unreasonable.     Steel  v.  Whijyple,  21  Wend.  103. 

§  197.  It  is  not  usurious  for  individuals  or  for  banks  to 
take  the  interest  in  advance  upon  loans,  if  it  be  done  bona 
fide,  and  in  the  ordinary  course  of  business.  Although  the 
peculiar  circumstances  of  the  case  may  render  it  usurious. 
Marvine  v.  Hymas,  2  Kern.  223. 

§  198.  Another  feature  that  must  be  present  and  enter 
into  all  questions  of  usury,  is  that  the  principal  must  he  at 
all  events  to  le  re-paid.  K  the  lender  assume  a  risk  upon 
the  loan,  and,  by  the  terms  of  the  contract,  the  re-payment 


rSUEY  AND   OXE  OF  ITS  COXSEQUEXCES.         89 

of  the  Slim  is  hazarded,  the  contract  is  not  nsui-ions.  For 
instance,  money  is  lent  on  a  bottomry  bond,  the  re-paymint 
being  dependent  on  the  safe  arrival  of  the  vessel.  An  in- 
terest otherwise  usurious  does  not  avoid  it.  Post-obit  bonds, 
where  a  smaller  sum  is  borrowed  and  a  much  larger  agreed 
to  be  re-paid  when  the  obligor  by  the  death  of  liis  father 
comes  into  the  possession  of  his  property,  is  another  instance. 
A  more  common  instance  is  where  the  lender  becomes  a 
partner  with  the  borrower,  assuming  the  partnership 
responsibility  to  the  creditors  of  the  firm.  Tliere  a  contract 
for  the  loan  and  partnership  is  good,  although  it  be  stipu- 
lated that  interest  beyond  the  legal  percentage  on  the  sum 
advanced  and  to  be  brought  into  the  business,  shall  be  paid 
to  him. 

§  199.  Another  noticeable  feature  is,  that  although  more 
than  the  legal  rate  of  interest  be  reserved  upon  a  contract 
for  the  loan  of  money,  yet  if  it  be  a  part  of  the  agreement 
that  the  borrower  may  discharge  himself  from  the  payment 
of  a7iy  interest  at  all,  by  the  re-payment  of  the  principal  on 
a  certain  day,  the  case  does  not  fall  within  the  statute. 
Wells  V.  Girling,  4  Moore,  T8. 

§  200.  To  render  a  contract  usm*ious,  the  interest  must 
he  reserved  at  the  time  of  the  agreement.  ISTo  subsequent 
reservation,  or  arrangement  for  a  usurious  security,  will  in- 
validate the  original  claim. 

§  201.  One  of  the  consequences  of  entering  into  a  con- 
tract clearly  usurious  is,  that  any  remote  security  for  any 
part  of  the  illegal  interest,  or  to  enforce  the  usurious  con- 
tract, is  made  to  follow  the  destiny  of  the  contract,  and  is 
unavailable  for  any  purpose.  Tlius  a  mortgage  tjiken  on  a 
loan  of  money,  including  a  former  usurious  loan,  is  void. 
Jackson  v.  Packard,  6  Wend.  415. 

§  202.  Suppose  a  legal  indebtedness  abeady  existing, 
and  in  consideration  of  forbearance,  the  debtor  agrees  to 
pay  usurious  interest  upon  it.  Tlie  second,  or  usurious  con- 
tract is  void,  but  the  original  debt  having  no  taint  of  usury 


90  BY  WnOM  USUEY  SET  UP. 

in  its  creation,  is  valid  and  enforceable.  Tlie  effect  of  such 
a  (Contract  in  discharging  the  sureties  upon  the  original  debt, 
came  up  for  consideration  in  Vilas  v.  Jo7ies,  1  Comst.  274; 
and  it  was  held  that  the  contract  to  forbear  being  void,  the 
sureties  were  not  discharged. 

§  203.  It  is  of  no  consequence  whether  the  usuiy  be  re- 
served in  one  instrument  or  in  several ;  or  whether  there  be 
a  note  for  the  payment  of  the  sum  borrowed  with  legal 
interest,  and  a  separate  verbal  agreement  to  pay  usurious 
interest.  The  only  question  to  determine  is,  whether  by  the 
teiins  of  the  agreement  itself,  without  any  respect  to  the 
manner  by  which  it  is  evidenced,  a  greater  than  the  legal 
interest  is  reserved,  and  this  is  a  question  of  fact  to  be  de- 
termined by  a  jury. 

§  204.  It  is  only  the  borrower  who  can  set  up  usury,  he 
being  the  only  party  aggrieved.  The  lender  will  not  be 
permitted  to  disturb  a  contract  which  is  executed.  And 
where  the  mortgagee  of  real  estate  which  was  subject  to  the 
lien  of  a  prior  judgment,  confessed  by  the  mortgagor  upon  a 
usurious  consideration,  moved  to  set  the  lien  aside,  his  ap- 
plication was  denied,  he  not  being  a  borrower  within  the 
meaning  of  the  statute.  He'xford  v.  Widger,  2  Comst. 
131. 

§  205.  "Where  a  note  or  other  security  is  given  originally 
upon  a  legal  consideration,  it  cannot  afterwards  become 
usurious,  at  whatever  rate  it  may  be  purchased  or  dis- 
counted. It  may,  like  any  other  chattel,  be  bought  and 
sold  at  its  market  value  ;  and  at  whatever  sum  purchased, 
the  maker  of  it  will  be  compellable  to  pay  the  full  amount 
due  on  its  face.  But  an  accommodation  note,  or  one  given 
without  value,  but  to  enable  the  holder  to  raise  money  uj)on, 
becomes  a  usurious  security  in  the  hands  of  any  person  who 
discounts  it  at  any  greater  than  the  legal  rate  of  interest. 
The  reason  is,  that  it  first  creates  a  debt  and  becomes  avail- 
able paper  in  such  hands,  and  is,  therefore,  usm-ious  in  its 
inception. 


EXCHANGE  OF  NOTES — WHEN  IJSTIRIOrS.  91 

§  20G.  The  simple  excliange  of  notes,  by  ^'liicli  the 
credit  of  one  party  is  given  in  exchange  for  that  of  the  other, 
could  not  be  said  to  attach  the  quality  of  accommodation  to 
either ;  but  if,  by  the  obligations  exchanged,  the  amoimt 
ultimately  to  be  paid  by  the  borrower  is  greater  than  that 
to  be  paid  by  the  lender,  the  transaction  would  be  considered 
as  usurious.    Schevmerlwrn  v.  Tallman,  4  Kern.  93. 

QUESTIONS. 

"What  is  the  genera!  rule  respecting  illegal  contracts  ?  What  the  pre- 
sumption ?  IIow  where  the  contract  may  he  effected  by  means  lawful 
or  unlawful  ?  What  contracts  are  void  for  immorality  ?  When  are  lets 
and  wagers  void  at  common  law  ?  What  contract  is  void  as  injuriously 
affecting  public  policy  ?  When  is  a  contract  in  general  restraint  of  trade  ? 
When  in  partial  restraint  ?  What  is  considered  in  deciding  on  the  rea- 
sonableness of  the  restraint  ?  What  contract  contravenes  the  policy  of 
the  insolvent  acts  ?  What  is  the  rule  as  to  contracts  in  restraint  of 
marriage  ?  What  is  a  marriage  brokerage  contract,  and  how  considered? 
What  instances  of  contracts  preventing  or  impeding  the  course  of  public 
justice  ?  What  is  tlie  effect  of  fraud  ?  How  defined  ?  What  the  gene- 
ral rule  ?  When  avoided  from  ?  How  when  committed  by  agent  ?  In 
what  case  may  agency  be  presumed,  to  punish  a  fraud  ?  How  much 
further  has  the  principle  been  carried  ?  At  whose  election  is  a  fraudu- 
lent contract  avoided  ?  When  must  he  exercise  the  right  ?  How  if  witli 
knowledge  he  deals  with  the  subject-matter  ?  When  an  oxprcs-;  contract 
rescinded,  what  effect  has  it  on  an  implied  one?  How  where  both 
parties  are  guilty  of  fraudulent  intent  ?  How  where  material  misrepre- 
sentation made  without  wilful  intent  ?  How  may  a  disinterested  person 
render  himself  liable  for  false  and  fraudulent  representations  ?  What 
instance  in  illustration  ?  Wliat  is  the  rule  as  to  suppression  of  material 
facts?  What  the  limitation?  What  the  distinction  between  extrinsic 
and  intrinsic  ?  Wluit  the  rule  as  to  the  extrinsic  ?  What  as  to  the  in- 
trinsic ?  When  cannot  a  party  be  permitted  to  be  silent  ?  When  does 
the  commission  of  a  fraud  upon  third  persons  occur  ?  What  necessary 
to  make  employment  of  puffers  or  by-bidders,  a  fraud  ?  What  the  rule  ? 
What  the  validity  of  an  agreement  not  to  bid  against  each  other  at 
auction  ?  When  are  contracts  void  by  statute  ?  Can  a  party  set  up  liis 
own  criminality  in  defence  ?  What  is  the  rule  as  to  contracts  made  void 
by  common  law  or  statute?  In  what  other  way  can  a  statute  render 
void  except  by  prohibiting  ?  What  is  usury,  and  how  embodied  in  a 
contrcact?    What  two  inquiries  in  relation  to  it?    What  is  esential  to 


92  EULE  OF  CONSTKUCTION  OF  CONTEACTS. 

the  being  of  usury  ?  Wliat  instance  of  a  loan  under  jiretonce  of  a  sale? 
What  otlicr  device  resorted  to  ?  What  must  loan  be  for,  to  be  usurious? 
What  instance  of  device  here  ?  What  must  be  shown  as  to  the  taking 
of  interest  ?  Uow  is  tlie  taking  of  compound  interest  I'egarded  ?  May- 
there  bo  charge  for  expenses  beyond  the  legal  rate,  without  being  usu- 
rious ?  IIow  is  it  when  interest  is  taken  in  advance  upon  loans  ?  What 
necessary  as  to  principal  to  make  contract  usurious?  What  if  lender 
assume  /isk  upon  loan  ?  What  instances  in  illustration  ?  What  if  bor- 
rower can  discharge  himself  by  re-payment  of  principal  without  any 
interest  ?  When  must  interest  be  reserved  t(»  be  usurious  ?  IIow  is  it 
■with  remote  security  taken  on  usurious  debt  ?  Where  legal  indebtedness 
exists,  how  is  it  with  usurious  contract  for  forbearance  ?  In  what  dif- 
ferent ways  may  usury  be  reserved  ?  Who  only  can  set  up  usury  ? 
Where  note  originally  valid  is  sold  at  usurious  discount,  what  is  rule  ? 
What  when  note  is  an  accommodation  one,  and  why  ?  What  when  notes 
are  exchanged  ?    What  exception  ? 

PART  II. 

CONTEACT    rsr    ITS  COXSTErCTION. 

§  207.  Tlie  law  prescribes  certain  rules  or  canons  of 
construction,  in  subjection  to  wliich  all  contracts  are  to  be 
explained,  applied,  and  enforced.  Tbe  legal  principles  in- 
voked for  this  purpose  and  presiding  over  this  department 
of  the  law,  although  of  vast  importance  to  the  practical  law- 
yer, are  yet  of  comparatively  little  to  the  business  world.  We 
shall  therefore  entirely  omit  the  consideration  of  them  here, 
and  dismiss  this  part  with  the  single  remark,  that  the  great 
primary  object  of  attainment,  and  with  reference  to  which 
all  the  canons  of  construction  are  adopted,  is — to  arrive  at 
the  real  intention  of  the  parties,  hy  a  fail'  and  reasonable 
construction  of  the  terms  they  have  employed  in  the  contract. 

PAET  III. 

CONTBACT  IX  ITS  PEEFOEMANCE,  OR  THE   DEFENCES  THAT  MAT  BE  IXTEE- 

POSED. 

§  208.  Tlic  most  of  these  are  of  great  practical  import- 
ance, and  the  knowledge  of  them  of  value  to  business  men. 
The  first  in  order  naturally  presenting  itself  is  PEKFOEiiAifCE. 


PAETT,  MAKNEB,    AJS'D   TIME   OF   PEEFOEMAIsCE.  93 

And  tlio  first  inquiry  is,  Who  is  the  party  to  perform  ?  The 
answer  is,  that  it  is  he  -^ho  can  entitle  himself  to  be  dis- 
charged from  legal  liability  npon  a  contract,  by  the  per- 
fonnance  of  a  certain  act.  A  party  is  to  pay  a  smn  of 
money.  He  is  bomid  to  go  to  the  party  entitled  to  receive 
it,  and  pay  or  tender  the  amount. 

§  209.  In  regard  to  the  manner  of  performance,  the  rule 
is,  that  the  execution  of  a  legal  contract  must  be  according 
to  its  legal  construction.  Where  it  is  in  the  alternative,  the 
right  to  elect  is  the  more  usually  with  the  promissor,  although 
the  strictly  accurate  rule  may  be  stated  to  be — that  the 
party  who  ought  to  do  the  first  act  is  entitled  to  the  election. 
Where  the  agi-eement  itself  presents  an  alternative,  and  one 
branch  of  it  cannot  in  law  be  performed,  the  promissor  is 
then  bound  to  perform  the  other.  One  under  obligation  to 
do  one  of  two  things  by  a  certain  day,  has,  until  the  day  is 
past,  a  right  to  make  his  election.  But  by  suffering  the  day 
to  pass  without  performing  either,  his  right  of  election  is 
lost. 

§  210.  The  contract  must  be  performed  according  to  its 
terms.  A  stipulation,  for  instance,  merely  for  a  deed  or 
conveyance  of  real  estate,  is  answered  by  the  giving  a  quit- 
claim deed.  But  if  the  stipulation  be  to  execute  and  deliver 
a  good  and  sufficient  deed  to  convey  the  title,  that  only  admits 
of  performance  by  giving  such  an  one  as  will  convey  a  good 
title.  When  an  act  is  necessary  to  be  done  in  order  to 
enable  another  party  to  perform  the  contract,  that  act  must 
first  be  done.     Downer  v.  Trissle,  10  Verm.  5J:1. 

§  211.  In  relation  to  time  of  jyerfrn'mance.  The  general 
rule  is,  that  where  there  is  any  agreement  as  to  time  when 
a  contract  is  to  be  performed,  the  performance  must  be 
within  or  at  that  time.  With  the  exception  of  negotiable 
paper,  the  term  month  is  understood  to  mean  a  lunar  and 
not  a  ccdendar  one.  In  those  cases  where  the  time  is  to  be 
computed  from  an  act  done,  the  day  of  doing  it  is  excluded; 
and  where  tlie  contract  contains  a  stipulation  for  the  per- 


94  WHAT   WILL   EXCUSE   NON-PEKFORMAKCE. 

formancG  of  an  act  at  a  future  time,  the  party  to  perform 
may  subject  liimself  to  a  liability  for  non-performance  by 
disabling  liiniself  from  fulfilling  the  agreement. 

§  212.  As  to  what  will  excuse  non-performance,  the  rule 
is,  that  where  the  law  devolves  a  duty  upon  a  party,  the 
performance  of  it  shall  be  excused  if  it  be  rendered  impos- 
sible by  act  of  God,  But  where  a  party,  by  his  own  con- 
tract, absolutely  engages  to  do  an  act,  then  prevention  by 
inevitable  accident  w^ill  not  excuse.  A  lessee  covenants  to 
repair,  and  the  premises  are  injured  or  destroyed  by  light- 
ning, fire,  or  wind.  lie  is  not  discharged  from  his  cove- 
nant, nor  is  the  landlord  prevented  from,  recovering  rent 
during  the  tenancy.     Allen  v.  Culver,  3  Den.  28-i. 

§  213,  If  the  contract  be  for  the  performance  of  an  act 
which  the  promissor  alone  is  competent  to  perform,  and  he 
is  prevented  by  an  act  of  God,  the  obligation  is  discharged. 
As  an  entire  contract  is  incapable  of  apportionment,  no 
partial  performance  of  it  can  entitle  to  remuneration  even 
where  the  completion  is  pr,evented  by  accident.  But  a 
claim  pro  tanto  may  sometimes  arise  upon  a  quantum 
meruit  (as  much  as  one  merits)  where  the  contract,  as  an 
entire  one,  is  destroyed  by  the  party  who  is  to  make  the 
payment  accepting  and  retaining  the  benefit  of  the  partial 
performance,  after  the  time  for  its  completion  has  elapsed. 

§  214.  When  a  condition  precedent  is  clearly  inferable 
from  that  contract,  the  plaintifi",  before  he  can  entitle  him- 
self to  recover,  must  aver  and  prove  either  actual  performance 
on  his  part,  or  an  offer  to  perform  which  the  defendant  re- 
jected ;  or  his  readiness  to  fulfil,  until  the  defendant  dis- 
charged him,  or  prevented  his  performance  of  it.  Li  the 
case  of  concurrent  corisideration,  the  act  to  be  done  by  each 
party  being  to  occur  at  the  same  time,  neither  party  can 
recover  against  the  other  without  showing  either  a  perform- 
ance, or  an  offer,  or  a  readiness  to  perform,  his  part  of  the 
agreement ;  or  a  wrongful  discharge,  or  prevention  of  such 
performance,  by  the  other  party.     But  where  the  mutual 


EIGHT   OF   KESCINDrN'G   CONTEACT.  95 

promises  or  contracts  are  independent^  eacli  party  has  liis 
remedy  on  the  covenant  or  promise  in  his  favor,  without 
performing  his  part  of  the  contract. 

§  215.  A  question  of  great  importance  may  arise  as  to 
when  a  party  is  at  liberty  to  rescind  a  contract  by  reason 
of  non-performance  by  the  other  X)arty.  Or,  in  other  words, 
what  kind  or  amoimt  of  non-performance  by  one  will  justify 
a  rescinding  by  the  other.  In  all  those  cases  where  a  party 
fails  to  perform  a  condition  precedent,  the  other  party  is 
clearly  exonerated  from  performance  on  his  part. 

§  216.  It  is  not  any  slight  omission  of  performance 
on  one  side,  that  will  give  to  the  other  the  right  of  rejecting 
entirely  the  contract,  and  of  absolving  himself  from  all 
obligation  in  relation  to  it.  But  in  order  to  justify  a  total 
abandonment,  the  failure  of  the  opposite  party  must  be  a 
total  one,  so  total  that  the  object  of  the  contract  is  de- 
feated or  rendered  unattainable  by  his  misconduct  or 
default. 

§  217.  In  all  cases  where  there  is  an  election  to  rescind 
a  contract,  the  rule  is — that  it  must  be  wholly  or  in  no  part 
rescinded.  A  party  cannot  treat  it  as  void  so  far  as  to  re- 
claim his  property,  and  at  the  same  time  in  force  for  the  pur- 
pose of  recovering  damages.  A  familiar  instance  of  this  would 
present  in  a  case  where  one  party  in  an  executory  contract, 
does  an  act  which  will  authorize  the  other  party  to  rescind 
it.  He  then  brings  an  action  on  an  implied  promise  to  re- 
cover a  compensation  for  part  performance,  as  though  no 
special  contract  existed.  Held,  that  he  camiot  at  the  same 
time  claim  under  the  contract,  so  as  to  entitle  him  to  dam- 
ages which  he  could  not  recover  except  by  vii'tue  of  the 
contract.     Hill  v.  Greene^  4  Pick.  114. 

§  218.  The  right  of  rescinding  a  contract  vests  only  in 
the  party  who  has  been  guilty  of  no  default ;  and  by  him 
it  can  only  be  exercised  within  a  reasonable  time.  But 
where  the  party  who  was  to  perform  the  condition  prece- 
dent by  a  certain  time,  before  the  arrival  of  that  time  dis- 


96  EIGHT  OF  EESCmDrnG  CONTEACT. 

ables  himself  from  performing  it,  the  other  party  may  im- 
mediately ahandon  the  contract. 

§  219.  To  enable  a  party  to  rescind,  and  recover  back 
money,  as  having  been  received  to  his  use,  one  of  two 
things  is  necessary : 

1.  The  other  party  must  concur  in  treating  the  agree- 
ment as  abandoned  db  initio,  or 

2.  It  must  have  been  a  part  of  the  original  agreement 
that,  in  a  certain  event,  the  power  of  rescinding  and  right 
to  recover  back  such  money  should,  by  the  terms  of  the 
contract,  be  vested  in  one  of  the  parties. 

§  220.  In  an  agreement  which  is  of  a  continuing  nature, 
and  has  been  in  ^ixri  ^QriorviQ^,  i\\Q  further  perfoi'mance 
of  it  may  sometimes  be  excused,  or  even  discharged,  by 
such  conduct  on  the  part  of  the  other  party  as  is  wholly  at 
variance  with  the  sjnrit  of  the  contract.  For  instance,  an 
author  agrees  to  write  articles  for  a  periodical  work,  the 
publication  of  which  is  subsequently  abandoned.  He  is  not 
only  discharged  from  the  obligation  of  contmuing  to  write, 
but  may  recover  the  value  of  whatever  services  he  many 
have  already  rendered.  Blanche  v.  Colhurn,  5  Carr.  <& 
Payne,  58. 

§  221.  A  very  good  rule  to  test  the  right  of  one  of  the 
parties  to  rescind  a  contract  in  toio,  is  to  inquire  whether, 
if  rescinded,  both  parties  will  be  placed  in  the  identical 
situation  which  they  occupied,  and  will  stand  upon  the 
same  terms  as  those  which  existed  when  the  contract  was 
made.  If  not,  there  can  exist  no  right  to  rescind.  "Where 
there  is  a  valid  agreement  to  rescind  a  contract  of  sale,  the 
same  formalities  of  delivery,  etc.,  are  necessary  to  revest  the 
property  in  the  original  vendor,  which  were  required  to 
complete  the  original  contract  of  sale. 

§  222.  Another  defence  which  it  becomes  important  to 
consider  is  that  of  Payment  ;  and  the  first  inquiry  here 
relates  to  the  person  to  whom  such  payment  can  be  safely 
made.     This  may  be — 


PAET  PAYMENT  WHEN   A   SATISFACTION.  Ui 

1.  To  the  attorney  of  tlie  creditor  wlio  is  employed  to 
collect  the  debt.  But  it  should  be  to  the  attorney  himself 
and  not  to  his  agent,  as  his  retainer  to  collect  is  in  the  na- 
ture of  a  special  authority. 

2.  To  any  agent  of  the  creditor  who  is  authorized  to 
receive  payments  in  the  ordinary  course  of  business. 

3.  To  a  person  who  to  all  appearance  is  intrusted  with 
the  business  of  the  creditor,  and  whom  the  creditor  per- 
mits to  assume  such  appearance. 

4.  To  a  trustee,  he  having  the  legal  title. 

5.  To  one  of  several  partners. 

6.  To  one  of  several  executors. 

§  223.  The  next  inquiry  regards  the  amount  to  be  paid ; 
and  the  main  question  here  is  as  to  the  effect  oi jj)art  'pay- 
ment of  a  debt,  or  a  promise  of  such,  in  satisfaction  of  the 
whole.  A  difference  is  here  recognized  between  paying 
the  part  in  such  satisfaction  'before  the  day  at  which  the 
debt  falls  due,  or  suhsequently.  If  before,  or  in  a  manner 
not  provided  for  in  the  original  agreement,  and  more  ad- 
vantageous to  the  creditor,  there  is  then  a  new  considera- 
tion, which  will  support  a  new  promise.  So  the  receipt  of 
one  thing,  as  a  horse,  in  satisfaction  for  another,  as  a  sum 
of  money  already  due,  is  a  good  payment.  So  the  accept- 
ance of  a  new  security,  as  the  note  or  bond  of  a  third  person 
in  satisfaction  of  a  debt,  although  for  a  less  amount,  is  a 
payment  of  the  whole.  So  also  the  payment  of  a  part  in 
money,  the  creditor  at  the  time  executing  to  the  debtor  a 
discharge  or  release  under  seal  of  the  whole  debt,  will  pre- 
clude him  from  afterwards  attempting  the  collection  of  it. 
And  where  a  discharge  not  under  seal,  or  technically  a  re- 
lease, is  given,  it  would  probably  be  held  sufficient.  Mil- 
liken  v.  Brown,  1  Eawle,  397.  But  where  the  whole  exists 
in  contract,  resting  on  an  agreement  to  receive  a  part  of  a 
debt  in  satisfaction  of  the  whole,  the  same  being  already 
due,  tlierc  is  no  legal  obligation  incurred  ;  because  there  is 
no  consideration  to  support  such  a  contract.  The  whole 
7 


98  WHEN    PATiCENT   MAY   BE   PKESUMED. 

debt  bein<^  due,  there  is  no  consideration  to  support  a 
promise  to  receive  a  part  in  satisfaction. 

§  224.  Anotlier  inquiry  regards  the  time  when  payment 
tnay  he  preswmed.  The  lapse  of  time,  and  other  circum- 
stances, independent  of  the  statute  of  limitations,  may  some- 
times afford  grounds  of  presumption  of  payment.  The  fol- 
lowing will  serve  as  illustrations  :  • 

1.  A  receipt  is  given  for  rent  due  on  a  certain  day.  It 
affords  presumptive  evidence  that  the  former  rents  have 
been  regularly  paid. 

2.  A  highway  tax  for  one  year  was  not  included  in  the 
bill  for  the  next.     Presumed  to  be  paid. 

3.  A  having  a  demand  against  B,  the  latter  pays  him 
money  and  takes  a  receipt  in  full  of  all  accounts.  A's  de- 
mand is  presumed  paid. 

4.  An  order  to  pay  money  is  found  in  the  hands  of  the 
drawee.     Presumptive  evidence  of  payment. 

5.  All  debts,  including  specialties,  or  those  under  seal, 
may  be  presumed  paid  after  the  lapse  of  twenty  years,  un- 
less circumstances  are  shown  to  rebut  such  an  inference. 

6.  A  check  payable  to  the  order  of,  and  endorsed  by 
the  creditor,  and  in  the  hands  of  a  third  person,  is  presump- 
tive evidence  of  payment ;  but  one  payable  to  the  creditor 
or  bearer  affords  no  proof  of  payment,  unless  it  is  also  shown 
that  the  creditor  or  his  agent  actually  received  the  money 
thereon. 

7.  An  order  is  given  by  the  creditor  on  the  debtor,  di- 
recting the  money  to  be  paid  to  a  third  person.  This  when 
acted  upon,  and  the  money  paid  in  pursuance  of  it,  will 
discharge  the  debt. 

8.  A  payment  made  in  counterfeit  bills,  or  in  bills  on 
broken  banks,  is  no  satisfaction  of  the  debt. 

9.  Money  sent  in  a  letter,  properly  directed  by  a  debtor 
to  his  creditor,  at  the  request  of  the  latter,  discharges  the 
debt  whether  it  be  received  or  not.     All  the  requisitions  of 


APPLICATION   OF   PAYMENTS   HOW   MADE.  99 

the  Post-office  Department  to  insure  transmission  must  be 
complied  -mth. 

§  225.  Questions  are  very  frequently  arising  relative 
to  the  application  to  he  made  of  payments  where  money  is 
paid  in  generally  and  there  is  an  indebtedness  on  several 
accounts.  This  may  occur  where  one  debt  is  due  on  which 
there  is  no  security,  and  another  or  others  which  are  se- 
cured by  the  guarantee  of  responsible  parties.  When 
money  is  paid  in  such  cases,  its  special  application  is  gov- 
erned by  the  following  principles  : 

1.  The  debtor  has  the  right,  at  the  time  he  makes  the 
payment,  to  apply  it  to  whichever  account  he  chooses,  and 
the  creditor,  if  he  receive  the  money,  is  bound  to  acguiesce 
in  such  application.  He  is  considered  as  receiving  the 
money  subject  to  it. 

2.  The  circumstances  under  which  the  payment  is  made 
may  also  raise  so  plain  an  inference  in  regard  to  intention, 
as  to  be  equivalent  to  an  express  declaration  by  the  debtor. 
Suppose,  for  instance,  that,  at  the  time  of  the  payment,  the 
debtor  denies  one  debt  and  admits  the  other,  or  the  sum 
paid  precisely  agrees  with  one  of  the  debts  but  not  with  the 
other. 

3.  If  the  debtor,  at  the  time  of  the  payment,  makes  no 
special  application  of  it,  and  circumstances  fail  to  show  any 
clear  intention  on  his  part,  it  is  then  the  right  of  the  creditor 
to  apply  it  to  whichever  of  the  demands  he  may  choose. 
Even  if  one  debt  is  barred  by  the  statute  of  limitations,  and 
the  other  is  not,  he  may  apply  it  on  the  debt  so  barred, 
but  that  will  not  have  the  effect  of  taking  any  balance  out 
of  the  operation  of  the  statute.  Tliere  are  cases  in  which, 
although  the  payment  be  general,  yet  the  creditor  is  pre- 
cluded from  making  the  application.  A  creditor,  for  in- 
stance, has  two  accounts  with  the  debtor,  one  as  executory 
the  other  individual.  Tlie  law  will  not  in  such  case  per- 
mit him  to  make  the  application  to  any  other  than  the  in- 
dividual account. 


100  APPLICATION  OP  PAYMENTS. 

4.  The  case  may  occur  where  both  the  debtor  and 
creditor  fail  to  make  any  special  application  of  the  pay- 
ment. The  law  then  makes  the  ap|)lication  according  to 
the  justice  and  equity  of  the  case.  The  following  are  some 
of  the  illustrations  showing  how  this  application  is  made  : 

A  debtor  makes  a  payment,  and  at  the  time  owes  a 
prior  legal  debt,  and  against  whom  exists  also  an  equitaMe 
demand  subsequent  to  such  debt.  Application  is  made  to 
the  prior  debt. 

At  the  time  of  the  payment  one  debt  is  due,  the  other 
consists  in  a  mere  contingent  liability.  Application  to  the 
debt  due. 

On£  debt  is  due  when  the  payment  is  made,  the  other 
not.     Application  to  the  former. 

A  debtor  makes  a  payment  generally  on  a  note.  It  is 
first  applied  to  extinguish  the  interest,  and  then  what  re- 
mains, if  any,  is  applied  on  the  principal. 

There  are  two  demands — one  arising  out  of  a  lawful 
contract,  the  other  out  of  a  usurious  or  unlawful  one.  Ap- 
plication will  be  made  to  the  legal  demand. 

A,  a  partner,  owes  a  private  debt  to  B.  The  firm  in 
which  A  is  a  partner  are  also  indebted  to  B.  A  pays  money 
of  the  firm  generally.  The  law  applies  it  to  the  partner- 
ship debt. 

§  226.  This  doctrine  of  application  never  arises  for  con- 
sideration where  there  are  not  distinct  accounts,  or  where  all 
the  parties  treat  separate  accounts  as  one  entire  account.  In 
all  such  cases,  the  efiect  of  payments  made  generally  is  to  dis- 
charge in  succession  the  earlier  items.  Where,  for  instance, 
one  of  several  partners  dies,  the  firm  being  in  debt,  and  the 
surviving  partners  continue  their  dealings  with  a  particular 
creditor  who  joins  the  transactions  of  the  old  and  new  firm 
in  one  entire  account,  the  payments  which  are  from  time  to 
time  made  by  the  surviving  partners,  must  be  applied,  as 
far  as  they  go,  first  in  extinguishment  of  the  old  debt. 
Neither  has  this  doctrine  any  application  except  to  cases 


EFFECT    OF   KECEIPT.  101 

Tvhere  the  debtor  has  an  opportunity  of  applying  his  pay- 
ment, but  neglects  to  do  so.  And  hence,  where  an  attorney, 
by  collecting,  received  money  belonging  to  his  client,  it 
was  held  that  he  could  not  make  the  application,  as  the 
client  had  not  had  the  opportunity  of  first  making  it  hin> 
self,  Walle/'  v.  Zacy,  8  Dowl.  P.  C.  563.  An  agent  having 
blended  a  demand  due  to  his  principal  with  one  due  to 
himself,  receives  a  general  remittance  from  the  debtor.  It 
shall  be  applied  towards  the  discharge  of  both  debts  pro 
rata.  And  if  several  notes  are  joined  in  one  suit,  and  the 
execution  issued  on  the  judgment  obtained  therein  is  satis- 
fied only  in  part,  a  surety  on  some  of  the  notes  may  insist 
on  a  proportional  application  of  the  money.  Several  prin- 
ciples in  regard  to  application  of  payments  decided  in  Allen 
V.  Culver^  3  Denio^  284. 

§  227.  The  conclusiveness  of  a  'receipt  given  on  the 
payment  of  money  has  often  come  up  for  settlement ;  and 
the  general  rule  is,  that  a  receipt  or  other  acknowledg- 
ment not  being  under  seal,  amounts  to  no  higher  than  pre- 
sumptive evidence,  that  the  money  therein  mentioned  has 
been  paid.  It  may  be  disproved  on  the  groimd  of  fraud  or 
mistake  of  facts  ;  and  although  some  doubt  as  to  the  right 
to  contradict  its  terms  by  parol  evidence  may  possibly  arise 
out  of  Egleston  v,  Knickerhocker^  6  Barh.  458,  yet  since  the 
case  of  Wadsworth  v.  Allcott,  2  Seld.  64,  the  right  of  intro- 
ducing parol  evidence  to  vary  and  even  contradict  its  terms 
cannot  well  be  doubted.  K,  however,  a  receipt  be  also  in 
the  nature  of  a  contract,  it  is  so  far  within  the  general  rule, 
and  is  not  liable  to  be  varied  by  parol  evidence.  An  in- 
stance of  this  is  a  bill  of  lading  having  a  twofold  aspect, 
a  receipt  of  the  goods,  and  also  a  contract  to  carry  and 
deliver.  2  Covku  dj  Il'dVs  Notes  to  Phillips'  Evidence^ 
1439. 

§  228.  The  third  defence  that  may  be  interposed  is  in 
legal  language  termed  accokd  and  satisfaction — settlement 
perfected.     Several  questions  arise  here  of  interest  both  to 


102  DEFENCE   OF   ACCORD   AND    SATISFACTION:. 

the  business  and  professional  man,  and  the  first  regards  the 
efi'ect  of  accord  without  satisfaction.  The  rale  liere  is,  that 
the  one  existing  without  the  other  is  no  extinguishment 
of  a  debt,  no  bar  to  an  action.  An  accord  to  make  satis- 
faction at  a  future  day,  has  no  effect  upon  the  original  debt, 
unless  the  satisfaction  be  done  and  accepted.  An  accord 
or  agreement  to  render  satisfaction  at  a  future  day,  in  order 
to  be  effecual  in  barring  an  action  on  the  original  demand, 
must  be  founded  on  a  new  consideration,  and  be  so  far 
binding  on  the  debtor  as  to  afford  the  creditor  a  fresh  right 
of  action  for  its  non-performance.  For  instance,  an  accord 
with  r/iutual  j)romises  to  perform  is  good,  although  the  thing 
be  not  performed  at  the  time  of  the  action,  because,  in  such 
case,  the  party  has  a  remedy  to  compel  performance.  But 
the  test  of  the  suflBciency  of  that  remedy  is,  that  the  party 
might  have  taken  it  upon  the  mutual  promise  at  the  time  of 
the  agreement.  Here  executory  agreements  do  not  avail  to 
discharge  the  debts  until  they  are  executed^  unless  it  is  clear 
that  thQ  promise,  and  not  the  performance,  is  agreed  to  be 
the  satisfaction. 

§  229.  If  done  before  breach  of  the  original  agreement, 
a  substituted  executory  agreement  is  a  good  defence ;  but 
unless  performance  be  shown,  it  should  not  be  set  up  as  an 
accord  and  satisfaction.  Good  v.  Cheeseman,  2  B.  &  Ad. 
328.  "Where  a  bond,  or  other  specialty,  is  taken  for  or  on 
account  of  a  simple  contract  debt,  unless  clearly  as  collat- 
eral security,  the  latter  becomes  merged  in  the  former,  and 
no  action  can  be  sustained  upon  it.  One  quality  of  a  satis- 
faction to  render  it  sufficient,  is  that  it  be  advantageoiis  to 
the  party  agreeing  to  receive  it.  It  would  be  adjudged 
inoperative,  if  it  could  not  possibly  afford  him  any  equiv^ 
alent  benefit. 

§  230.  A  release  as  evidence  of  accord  and  satisfaction 
may  be  either — 1.  By  act  of  the  parties ;  or  2.  By  act  of 
the  law.  Technically  it  should  be  under  seal,  which  of 
itself  imports  a  consideration.     A  parol  contract  may,  be- 


UPON   WHAT   RELEASE   OPEEATES.  103 

fore  any  breach,  be  released  by  parol ;  but  a  sealed  con- 
tract, in  order  to  be  released,  requires  either  a  sealed  re- 
lease, or  a  parol  release,  founded  upon  a  sufficient  considei*- 
ation. 

§  231.  Although  the  payment  of  part  of  a  debt  as  a 
satisfaction  of  the  whole  is  not  sufficient,  unless  there  be  a 
release,  yet  it  is  otherwise  in  a  composition  arrangement 
made  between  a  debtor  and  his  creditors.  Such  an  ar- 
rangement being  made  with  other  creditors  and  the  debtor, 
the  creditor,  in  common  with  the  others,  receiving  a  part 
of  his  demand  as  a  composition  or  in  full ;  that  of  itself  is 
an  extinguishment  without  a  release.  It  would  be  a  fraud 
on  the  other  creditors  to  allow  him  to  seek  to  enforce  the 
balance. 

§  232.  A  creditor  receiving  a  part  of  his  debt  from  a 
third  person,  who  pays  in  the  expectation  that  the  debtor 
shall  not  be  molested  for  the  remainder,  cannot  afterwards 
recover  the  balance,  although  there  be  no  release. 

§  233.  As  a  general  principle  a  sealed  executory  con- 
tract cannot  be  released  or  rescinded  by  a  parol  executory 
cont/ract,  but  after  hreach  of  a  sealed  contract,  a  right  of 
action  may  be  waived  or  released  by  a  new  parol  contract 
in  relation  to  the  same  subject-matter,  t)r  by  any  valid  parol 
executed  contract.    Delacroix  v.  BulTdey,  13  Wend,  71. 

§  234.  IS'o  particular  form  of  words  is  necessary  to  con- 
stitute a  valid  release.  There  must  exist  the  evident  inten- 
tion on  the  part  of  the  creditor  to  renounce  the  claim,  or 
discharge  the  debtor.  A  covenant  not  to  sue,  without 
limitation  as  to  time,  is  legally  tantamount  to  a  release.  So 
also  an  indemnity  by  the  creditor  against  all  claim  for  or 
on  account  of  the  debt,  operates  as  a  release. 

§  235.  A  question  not  unfrequently  presents  itself  as 
to  the  operation  of  a  release.  Upon  what  does  a  release 
operate  ?  The  answer  is  that  technically  it  only  operates 
on  a  present  interest.  But  a  present  vested  right  to  take 
effect  in  the  future,  may  be  the  subject  of  a  release.     Woods 


104  EELEASE  BY  OPEKATION  OF  LAW. 

V.  Williams,  9  Johns.  123.  A  release  of  the  principal 
money  operates  as  a  release  of  the  interest. 

§  236.  A  release  by  one  of  several  joint  creditors  is  a 
discharge  of  the  debt.  But  such  release  by  a  partner,  in  con- 
sideration of  a  debt  due  from  him  individually,  will  not  dis- 
charge the  partnership  debt.  Gram.  v.  Cadwell,  5  Gowen, 
489. 

§  237.  A  technical  release  under  seal,  to  one  of  several 
joint  debtors,  is  a  release  of  the  debt.  And  the  same  effect 
also  is  produced,  although  the  obligation  or  agreement  be 
several  as  well  aa  joint.  But  a  release  to  the  representative 
of  a  deceased  joint  debtor  does  not  operate  as  such  to  the 
survivor,  as  he  is  no  surety,  but  legally  liable  for  the  pay- 
ment of  the  debt.  It  is  comj)etent,  however,  in  a  release 
to  one  of  several  joint  contractors,  so  to  restrain  its  opera- 
tion by  the  express  terms  of  the  instrument,  as  to  limit  its 
effect  to  one  without  discharging  the  others.  /Solly  v. 
Forhes,  2  Ball  &  Baty,  38. 

§  238.  An  instance  of  a  release  or  discharge  by  opera- 
tion of  law,  occurs  where  higher  security  is  taken ;  as  a 
specialty,  or  instrument  under  seal,  for  a  simple  contract 
debt.  This  effects  a  merger  and  extinguishment  of  the 
latter.  This  always  occurs  unless  the  higher  security  is 
taken  simply  as  additional  or  collateral  security,  in  which 
case  the  remedy  is  perfect  upon  both. 

§  239.  Another  instance  falling  within  the  same  general 
principle,  occurs  where  a  material  alteration  has  been  made 
in  it  without  his  consent.  To  illustrate — where  a  petition 
describing  the  particular  courses  of  a  road  between  two 
termini  was,  after  being  signed,  so  altered  as  to  retain  the 
same  termini,  but  to  leave  its  intermediate  courses  to  a 
locating  committee,  it  was  held  to  absolve  all  those  pe- 
titioners whose  private  interests  it  might  injuriously  affect. 
Jewett  v.  Hogdon,  3  Greenleaf,  103. 

§  240.  The  effect  of  a  trifling  or  unimportant  alteration, 
not  affecting  the  sense  or  operation  of  the  instrument,  will 


EFFECT   OF   ALTEEATION   AITD   TVHEN   MADE.  105 

depend  much  upon  the  natm-e  and  extent  of  it,  the  party 
making  it,  and  the  circumstances  under  "vrhich  it  was  made. 
The  law,  as  settled  in  the  older  cases,  held  alteration  by  the 
obligee  or  the  party  owning  it,  although  in  an  immaterial 
part,  to  avoid  the  instrument.  An  alteration  by  a  stranger 
in  an  immaterial  part  would  never  have  produced  that  effect. 
In  this  country  the  principle  has  been  very  generally  adopted, 
that  an  immaterial  alteration  will  not  avoid  an  instrument, 
by  whomsoever  it  may  be  made.  8  jS^eio  IIamj)shire, 
139  ;  8  Cowen,  Tl.  Even  a  material  alteration  made  by  a 
stranger,  has  been  held  not  to  render  the  instrument  in- 
operative. 10  Conn.  192 ;  Bees  v.  Overbagh,  6  Cowen,  Y46. 
The  loss,  cancellation,  or  destraction  of  an  instrument  occur- 
ring through  mistake  or  accident,  even  by  the  party  in- 
terested, will  not  now  discharge  the  contracting  party  from 
liability,  except  in  the  case  of  such  negotiable  paper  as  is 
transferable  by  delivery. 

§  241.  In  the  absence  of  all  positive  testimony,  the 
question  has  arisen  as  to  when  any  alteration  shall  be  pre- 
sumed to  have  been  made.  The  question  is  one  of  vast  im- 
portance, because,  if  prior  to  execution,  although  material, 
it  will  not  affect  the  validity  of  the  instniment.  The  subse- 
quent execution  of  the  instrument  would  render  it  subject  to 
the  alteration.  If  subsequent,  it  might  avoid  the  instru- 
ment. The  decisions  on  this  point  have  not  been  uniform, 
but  the  better  opinion  seems  now  to  be,  that  whether  ^>m?' 
or  subsequent  is  properly  a  question  of  fact  for  the  jury. 

§  242.  Another  species  of  defence  is — the  pendency  of 

ANOTHER   ACTION,    OT    JTDGMENT    BEFORE   EECOVEEED   FOE   THE 

SAME  CAUSE  OF  ACTION.  'In  reference  to  the  first,  the  mere 
pendency  of  an  action  does  not  operate  to  extinguish  the 
contract  upon  which  it  is  brought,  but  it  will  have  the  effect 
to  suspend  a  resort  to  any  other  action  until  its  determina- 
tion. But  the  obtaining  a  judgment  merges  in  it  the  claim 
upon  which  the  action  was  brought,  and  extinguishes  it,  so 


106  TENDER  AITD  STATUTE  OF  LIMITATIONS. 

that  it  may  be  interposed  as  a  bar  to  any  other  action  brought 
for  the.  same  cause. 

§  213.  Another  defence  briefly  to  be  noticed  is  arei- 
TEAMENT  AND  AWATJD.  The  rulc  here  is,  that  whenever  the 
claim  is  for  unliquidated  damages,  and  an  award  has  been 
made  upon  a  submission  giving  mutual  remedies  between 
the  parties,  in  case  of  non-performance  the  jjlea  of  arbitra- 
ment and  award  may  be  successfully  interposed.  But 
where  the  action  is  brought  for  a  debt,  and  the  award  has 
simply  asqertained  its  existence  and  amount,  tlie  plea  must 
go  further,  and  aver  performance  of  the  award.  Allen  v. 
Mtlner,  2  Crompton  &  Jervis,  47.  Where  there  is  a  clause 
introduced  into  the  agreement,  that  if  any  dispute  should 
arise,  the  matter  in  difference  should  be  referred  to  arbitra- 
tion, this  constitutes  no  defence  to  an  action.  Goldstone  v. 
Osborne,  2  Carr.  c&  Payne,  550. 

§  244.  Another  defence  is  Tendek,  which  to  be  good  re- 
quires the  actual  production  of  the  money,  unless  it  be  ex- 
pressly dispensed  with.  It  must  be  an  absolute  and  uncon- 
ditional offer  to  pay.  It  must  be  for  the  whole  amount  of 
the  debt,  unless  there  are  separate  and  distinct  sums  of 
money  due,  and  then  it  may  be  for  any  one  or  more  of  the 
sums,  stating  definitely  which.  The  tender  is  only  legal 
when  made  in  money  or  in  coin  ;  but  if  made  in  bank  biUs 
it  will  be  held  sufiicient,  unless  objection  is  made  upon  that 
ground. 

§  245.  Another  defence  which  business  men,  as  well  as 
the  profession,  are  much  interested  in  understanding,  is  that 
of  the  Statute  of  Limitations.  This  has  been  termed  a 
"  statute  of  repose.''^  It  quiets  all  claims  after  a  certain 
period  of  time.  It  is  a  perfect  bar  to  all  actions  which  are 
not  prosecuted  within  a  certain  limited  period,  after  the 
cause  of  action  had  accrued.  This  period  is  different  in 
different  States,  and  in  the  same  State  varies  with  the  dif- 
ferent species  of  demand.  In  the  State  of  ]S"ew  York,  in  aU 
demands  arising  out  of  contract,  express  or  implied,  the 


WHEN   STATUTE  BEGINS  AISHD  HOW  LONG  CONTINUES.     107 

period  is  six  years.  It  is  purely  a  creature  of  statute,  and 
hence  varies  in  different  states  and  nations.  Without  stating 
the  particular  provisions  of  the  statute,  which  are  so  different 
in  different  States,  I  shall  refer  to  some  of  the  well-settled 
principles  that  have  an  application  to  all  those  provisions. 

§  246.  This  statute,  in  regard  to  its  effect,  is  never  held 
to  discharge  or  extinguish  the  debt.  It  simply  bars  all 
remedy  for  its  recovery.  Hence  it  affects  no  lien  that  may 
exist  in  the  way  of  security  for  the  same  debt.  The  right 
to  a  pledge  or  pawn  remains  perfect,  although  the  recoveiy 
of  the  debt  it  was  given  to  secure,  would  otherwise  have 
been  barred  by  the  statute. 

§  247.  The  statute  begins  to  run  from  the  day  upon 
which  the  creditor  might  have  commenced  an  action  for  the 
recovery  of  his  demand,  such  day  being  included  in  the 
computation  of  time.  When  a  contract  is  to  do  a  thing  at 
a  future  time,  the  statute  will  commence  running  from  the 
breach.  In  case  of  indemnity,  the  statute  only  runs  from 
the  time  of  payment  under  it ;  and  in  those  cases  where  a 
surety  claims  contribution  from  his  co-surety,  the  statute 
does  not  begin  to  run  until  he  has  paid  something  beyond 
his  own  proportion  of  the  debt.  A  factor  who  has  sold 
consigned  goods  is  only  liable  from  the  time  demand  is 
made  upon  him  to  account.  In  case  of  a  promissory  note 
payable  on  demand^  the  statute  runs  from  the  date  of  the 
note,  and  of  a  special  contract  from  the  time  of  its  breach. 
"Where,  however,  a  bill  or  note  is  made  payable  at  a  particu- 
lar place,  no  cause  of  action  arises,  and  hence  the  statute 
does  not  begin  to  run,  until  demand  made  at  that  place.  In 
the  State  of  New  York,  when  a  fraud  has  been  perpetrated, 
which  remains  for  some  time  concealed,  the  statute  begins 
to  run  from  the  time  the  fraud  was  discovered. 

§  248.  Once  commenced,  the  statute  continues  running 
until  the  action  is  either  commenced,  or  barred  by  it.  If, 
however,  the  debtor  is  absent  from  the  state  at  the  time  the 
debt  falls  due,  the  statute  does  not  commence  to  run  until 


108       now  DEBT  TAXEN  OUT  OF  THE  STATUTE. 

his  return  ;  and  in  the  State  of  New  York  the  time  during 
which  lie  may  be  absent  and  reside  out  of  the  State,  after  it 
has  SO  commenced,  forms  no  part  of  that  period  of  time 
which  is  to  constitute  the  bar. 

§  249.  As  the  statute  of  Hmitations  only  lars  the  remedy. 
without  extinguisJiing  the  deht,  the  moved  obligation  still  re- 
mains, and  hence  a  new  promise,  without  any  new  considera- 
tion^ will  revive  the  original  liability.  In  order,  however, 
to  have  this  effect,  there  must  be  something  besides  a  mere 
admission  ;  there  must  be  an  express  promise  to  pay.  This 
devolving  so  much  upon  the  promise  naturally  resulted  in 
rendering  the  recovery  dependent  upon  the  nature  and  effect 
of  it ;  and  hence,  if  that  was  a  conditional  one,  to  exclude 
the  right  of  recovery  unless  that  condition  was  shown  to  be 
complied  with.  A  promise,  for  instance,  to  pay  when  ahle, 
devolved  upon  the  plaintiff  the  necessity  of  proving  that 
ability  before  he  could  be  permitted  to  recover.  In  this 
state  the  promise  is  required  to  be  in  writing,  and  signed  by 
the  debtor,  in  order  to  avoid  the  provisions  of  the  statute. 
The  promise  need  not  specify  any  particular  sum,  as  the 
amount  due  may  be  proved  by  other  evidence. 

§  250.  Tt  is  also  a  rule  that  a  part  payment  of  the  debt 
will  take  the  remainder  out  of  the  statute.  In  order  to  have 
this  effect,  the  party  paying  must  himself  apply  his  pay- 
ment on  the  debt.  A  payment  on  account  of  interest  will 
have  the  same  effect  as  on  that  of  principal.  Tlie  part 
payment  may  also  be  in  goods  as  well  as  money.  Indorse- 
ments on  a  promissory  note,  admittmg  the  receipt  of  in- 
terest, are  presumed  to  have  been  written  at  the  time  they 
bear  date.  One  partner  in  the  State  of  K"ew  York  cannot, 
after  dissolution  of  the  partnership,  by  any  promise  or  part 
payment,  revive  the  debt  as  against  the  other  partner. 

§  251.  Another  question,  that,  under  a  recent  decision 
in  the  State  of  ISTew  York,  may  still  be  regarded  as  doubt- 
ful, relates  to  the  effect  upon  a  joint  delt  of  part  pay- 
ment by  one  of  the  two  or  more  joint  debtors.    Under 


BET-OFF  iLND  EECOirrMENT.  109 

certain  limi,tations  or  qualifications,  it  has  generally  been 
considered  that  such  payment  by  one  operated  to  revive  the 
debt  against  the  other  or  others.  But  in  the  State  of  New 
York  it  has  been  recently  held  in  its  highest  court,  that  pay- 
ments upon  a  note  by  one  of  its  joint  and  several  makers, 
and  indorsed  upon  it  before  the  statute  was  a  bar,  did  not 
affect  the  defence  of  the  statute  as  to  the  other.  Shoemaker 
V.  Benedict^  1  Kern.,  176. 

.  §  252.  Another  defence,  often  interposed,  is  a  set-off. 
This  does  not  consist  in  a  reduction  of  the  plaintiff's  demand, 
nor  of  matter  of  defence  growing  out  of  his  claim.  It  is 
an  independent  debt  due  from  the  plaintiff  to  the  defendant, 
and  one  for  the  recovery  of  which  a  cross  actioji  might  be 
maintained  by  the  latter  against  the  former. 

§  253.  A  set-off  is  a  creature  of  the  statute,  not  existing 
at  common  law.  The  defendant  may  interpose  it  as  a  de- 
fence to  an  action  brought  against  him,  or  he  may  reserve  it 
and  institute  himself  a  suit  for  its  recovery.  No  debt  can 
be  the  subject  of  set-off  unless  actually  due  and  in  arrear 
at  the  time  of  the  commencement  of  the  action. 

§  25'1.  The  debt  sought  to  be  recovered,  and  that 
proposed  to  be  set  off,  need  not  be  of  the  same,  nature  or 
degree,  but  they  must  be  mutual,  and  due  in  the  same  right ; 
hence  one  of  several  defendants  cannot  set  off  a  debt  due  to 
him  alone  from  the  plaintiff ;  nor  can  the  defendant  set  oft* 
a  debt  due  to  him  from  one  of  several  plaintiffs.  A  defend- 
ant who  is  sued  as  executor  or  administrator  cannot  set  off 
a  debt  due  to  him  personally.  Nor  can  a  person  who  is  sued 
for  his  own  debt,  set  off  a  debt  which  accrued  to  him  in  his 
representative  character.  A  mere  equitable  demand  cannot 
be  the  subject  of  set-off  at  law. 

§  255.  A  defence  somewhat  analogous  to  that  last  men- 
tioned, and  which  is  of  comparatively  recent  introduction 
into  our  jurisprudence,  is  kecoltment.  This  consists  in  a 
right  recognized  in  the  defendant  to  set  up  the  damages  he 
has  sustained  in  consequence  of  a  violation  by  the  plaintiff 


110  WHEN  DEFENDiVlTT  MAT  EECOUP. 

of  some  stipulation  cmljraccd  in  the  same  contract  or  matter 
out  of  which  the  phiintifT's  right  of  action  arises.  The  de- 
fendant lias  a  right  of  action  for  the  recovery  of  all  such 
damages  ;  but  he  may  also,  if  he  so  elects,  recoup  (cut  off) 
tlie  plaintiff's  damages  by  as  much  as  tliosc  suffered  by  him 
against  the  plaintiff',  growing  out  of  the  same  transaction, 
.will  amount  to.  A  brings  an  action  against  B  upon  a 
promissory  note.  Defence — that  the  note  was  given  in 
payment  of  wood  purchased  standing,  the  vendor  of  it 
agreeing  to  indemnify  the  vendees  against  any  damage  that 
might  happen  to  the  wood  in  consequence  of  the  burning 
of  an  adjoining  fallow.  The  fallow  being  afterwards  burnt, 
the  wood,  which  constituted  the  consideration  of  the  note, 
was  destroyed  by  the  fire.  Held  that  tlie  vendees  might 
recoup.  Batterman  v.  Pierce^  3  Hill^  171.  It  was  also 
settled — 

1.  That  the  right  of  recoupment  was  not  confined  to 
cases  of  fraud,  but  extends  also  to  those  of  mere  breach  of 
contract. 

2.  Recoupment  is  admissible,  though  the  damages  on 
both  sides  are  unliquidated. 

3.  The  defendant  may  elect  whether  he  will  use  his  claim 
in  that  way,  or  reserve  it  for  a  cross  action. 

4.  When  he  elects  to  recoup,  he  cannot  have  a  balance 
certified  in  his  favor,  as  in  the  case  of  a  set-off. 

5.  He  cannot,  after  having  been  allowed  part  of  his 
claim  by  way  of  recoupment,  maintain  a  cross  action  for 
the  residue. 

§  256.  The  knowledge  of  the  law  of  contract  is  neces- 
sarily very  imperfect  without  understanding  something  of 
the  nature  of  the  damages  which  result  from  its  non-per- 
formance. The  only  compensation  which  the  law  has  in  its 
power  to  render  to  those  who  suffer  from  a  breach  of  con- 
tract, is  the  award  of  damages.  Chancery  can  offer  other 
remedies.  It  can  perpetually  enjoin  parties  from  future 
violations,  or  it  can  decree  that  contracts  shall  be  specifi- 


LIQUIDATED  DAMAGES  AND  PENALTY.  Ill 

cally  performed.  Thus  between  both,  the  remedies  afforded 
are  quite  complete.  Neither  will  concede  to  itself  but  what 
its  compensatory  powers  are  adequate  for  every  emergency. 
Ilence  parties  are  always  at  liberty  to  break  their  contracts 
equally  as  to  keep  them,  and  there  is  no  more  legal  morality 
in  the  one  than  in  the  other.  The  parties  by  keeping,  ren- 
der any  appeal  to  the  law  unnecessary.  By  breaking,  it 
becomes  necessary  to  make  the  appeal,  and  such  compensa- 
tory damages  are  awarded,  or  other  remedial  means  in 
chancery  granted,  as  will  place  the  party  injured  in  the 
same  situation  as  if  the  other  had  fully  performed  the  con- 
tract. Thus  damages  are  made  to  come  in  the  place  of 
performance,  and  the  law  considers  one  as  exactly  equivalent 
to  the  other. 

§  257.  The  first  question  that  properly  presents  itself, 
and  one  productive  of  great  difliculty  in  settling,  is  whether 
a  certain  sum  specified  is  to  be  considered  in  the  nature  of  a 
j>enalty^  or  of  liquidated  damages.  It  is  entirely  competent 
for  contracting  parties  to  do  either  one  of  two  things,  viz. : 
to  insert  in  the  instrument  a  certain  sum  as  a  penalty  to  be 
forfeited  in  case  of  non-performance,  and  under  which  the 
party  recovers  the  damages  that  have  been  actually  sus- 
tained ;  or,  to  providcj  in  anticipation,  for  the  damages 
which  either  will  sustain  in  case  of  a  violation  of  the  con- 
tract by  the  other,     Tlie  latter  is  called  liquidated  damages. 

§  258.  The  leaning  of  the  courts  has  ever  been  towards 
regarding  the  sum  inserted  in  the  contract  as  a  penalty, 
under  which  the  actual  damages  should  be  recovered. 
Where  the  agreement  provides  that  a  certain  sum  shall  be 
paid  in  the  event  of  performance  or  non-performance  of  a 
certain  specified  act,  in  regard  to  which  damages,  in  their 
nature  imcertain,  may  arise  in  case  of  default,  and  there  arc 
no  words  evincing  an  intention  that  the  sum  reserved  in  case 
of  a  breach  shall  be  viewed  only  as  a  penalty,  such  sum 
may  be  recovered  as  liquidated  damages.  Lowe  v.  Peers., 
4  Burr.  2225. 


112  I)AMA0E8   LIQUroATED  AJSTD  UNDEE  PENALTY. 

§  259.  Although  there  are  some  exceptions,  yet  it  may 
be  stated  as  a  general  principle,  that  where  a  certain  sum  is 
agreed  to  be  paid,  in  case  of  the  non-performance  of  a  spe- 
cified act,  and  it  be  reserved  as  a  penalty  by  name,  it  cannot 
be  viewed  as  liquidated  damages ;  the  word  penalty  evi- 
dencing a  contrary  intention.  Even  where  the  language 
used  was  in  the  penal  sum  of  $500  as  and  hy  way  of  liqui- 
dated damages^  it  was  held  a  penalty.  Davies  v.  Benton^ 
6  Barn,  d;  Cress.  216. 

§  260.  In  this  country  in  all  cases  where  the  question 
has  arisen,  the  leaning  has  strongly  been  towards  treating  a 
fixed  sum  as  a  penalty,  and  not  as  liquidated  damages.  But 
wherever  the  clear  intention  of  the  parties  proclaims  that 
liquidated  damages  was  the  thing  intended,  both  law  and 
equity  must  give  such  efi'ect  to  the  stipulation,  however 
severe  it  may  operate  upon  one  of  the  parties.  The  gene- 
ral principles  deducible  from  the  cases  may  be  stated 
to  be 

1.  The  language  of  the  agreement  is  not  held  to  be  con- 
clusive, and  the  effort  of  the  tribunal  will  be  to  get  at  the 
intent  of  the  parties. 

2.  When  the  agreement  is  in  the  alternative,  to  do  an 
act  or  pay  a  given  sum  of  money,  the  court  will  hold  the 
party  failing,  to  have  had  his  election,  and  will  compel  him 
to  pay  the  money. 

3.  In  case  of  an  agreement  to  do  some  act,  and  upon 
failure,  to  pay  a  sum  of  money,  the  court  will  look  into  the 
intent  of  the  parties  ;  that  no  particular  phraseology  will  be 
beld  to  govern  absolutely,  and  that  although  the  term 
"  liquidated  damages  "  will  not  be  conclusive,  the  phrase 
^^ penalty  "  will  generally  be  so. 

4.  If  the  sum  be  evidently  fixed  to  evade  the  usury  laws, 
or  any  other  statutory  provision,  or  to  cloak  oppression,  the 
courts  will  relieve  by  treating  it  as  a  penalty. 

5.  Whenever  tlie  sum  stipulated  is  to  be  paid  ou  the 


Lnnr  of  compen'SAtion.  113 

non-payment  of  a  less  sum  made  payable  by  the  same  instru- 
ment, then  it  will  always  be  treated  as  a  penalty. 

6.  Where,  independently  of  the  stipulations  the  damages 
would  be  wholly  uncertain  and  incapable  of  being  ascer- 
tained, except  by  conjecture,  there  the  damages  will  usually 
be  considered  liquidated,  if  they  are  so  denominated  in  the 
instrument.  Dcikin  v.  Williams^  22  Wend.  201.  Pearson 
V.  Williams,  26  Wend.  630.  Larajprtian  v.  Cochran,  16 
New  York  liep.  275.  Barjley  v.  Peddle,  16  New  York 
Rep.  469.     Cotheal  v.  Talraage,  5  Seld.  551. 

§  261.  Li  a  very  large  class  of  actions,  the  entire  claim 
is  for  damages.  In  these  cases,  as  where  actions  are  brought 
on  negotiable  paper,  the  contract  itself  furnishes  the  rule  of 
damages.  There  is  quite  a  large  class  of  cases  in  which  no 
other  damages  can  be  recovered,  than  such  as  are  nominal. 
Tliis  occurs  wherever  a  right  is  invaded,  or  a  cause  of  action 
comes  to  exist,  and  no  actual  damage  is  suffered. 

§  262.  It  is  often  a  matter  of  great  difficulty  to  fix  the 
limit  of  compensation.  The  law  refuses  to  take  into  consid- 
eration any  damages  remotely  or  consequentially  residting 
from  the  act  complained  of.  The  civil  law  held  the  defend- 
ant liable  for  those  damages  only  which  both  parties  may 
fairly  be  supposed,  at  the  time,  to  have  contemplated  as 
likely  to  result  from  the  nature  of  the  agreement. 

§  263.  Tlie  extent  of  liability  is  sometimes  dependent 
upon  the  peculiar  circumstances  under  which  a  man  acts. 
A  cai'penter  sells  timber  for  the  express  purpose  of  propping 
up  a  house.  Tlie  timber  proves  defective  and  the  building 
falls.  The  carpenter  is  liable.  But  the  same  timber  sold  in 
good  faith  by  a  man  not  a  carjienter,  would  only  render  him 
liable  for  the  diflerence  in  price  between  the  good  timber 
and  that  sold. 

§  26-1.  In  cases  of  wrongs,  torts,  and  wilful  injuries, 
damages  may  be  given  by  way  of  punishment  of  the  wrong 
doer.  But  in  cases  of  contract,  except  promises  to  marry, 
only  compensatory  damages  are  given,  those  alone  which 


114  CLASSIFICATION  OF  CASES. 

arc  the  natural  and  proximate  consequence  of  the  act  com- 
plained  of. 

§  265.  A  question  wliicli  lias  given  rise  to  a  good  deal 
of  discussion,  relates  to  the  loss  of  profits  consequent  upon 
a  breach  of  contract, — whether  such  loss  can  he  given  as 
damages.  The  rule  is,  that  remote  or  speculative  jjrofits 
cannot  be  recovered  by  way  of  damages.  But  all  profits 
are  not  excluded  as  remote  and  speculative.  Those  profits, 
or  advantages,  which  are  the  direct  and  immediate  fruits  of 
the  contract,  are  recoverable  as  damages.  They  enter  into 
and  form  a  part  of  the  contract  itself,  and  are  presumed  to 
have  been  taken  into  consideration,  when  it  was  made, 
forming,  perhaps,  the  chief  or  only  inducement  to  the  ar- 
rangement.   Masterton  v.  Mayor  of  Brooklyn,  7th  mil,  62. 

§  266.  Another  question  relates  to  the  right  to  recover 
damages  that  have  occurred  subsequent  to  the  commence- 
ment of  the  suit.  The  old  rule  adopted  and  adhered  to 
down  to  the  time  of  Lord  Mansfield  was,  that  even  interest 
on  a  demand  could  only  be  recovered  down  to  the  time  of 
commencing  the  suit.  In  a  case  where  the  plaintiff  recovers 
only  nominal  damages,  he  can  give  in  evidence  those  conse- 
quences of  the  act  which  are  immediately  traceable  to  it, 
although  their  occurrence  has  been  since  the  suit  was  com- 
menced. And  so  also  he  is  entitled  to  recover  for  those 
direct  and  immediate  consequences  of  the  act  complained 
of  which  are  so  closely  connected  with  it,  that  they  would 
not,  of  themselves,  furnish  a  distinct  cause  of  action. 

§  267.  By  a  systematic  arrangement  of  the  cases  that 
present  questions  of  damages,  three  different  classes  have 
been  specified : 

1.  Those  where  the  contract  is  only  for  the  payment  of 
money.  There  the  consequences  of  non-perfoi-mance  cannot 
be  itiquii'ed  into  in  any  way,  however  severe  they  may  have 
been.  Tlie  only  recoveiy  by  way  of  damages  is  the  interest 
on  the  money  due. 

2.  Those  where  the  contract  is  to  do,  or"  to  refrain  from 

\ 


MEASURE   OF   DAMAGES.  115 

doing,  some  particular  thing.  Here  the  rule  of  the  civil  law 
is  adopted,  viz. :  that  the  defaulting  party  shall  be  held 
liable  for  all  losses  that  may  fairly  be  considered  as  having 
been  in  the  contemplation  of  the  parties  at  the  time  of  the 
agreement. 

3.  Those  where  a  tort  or  wrong  is  committed,  or  the  ac- 
tion is  brought  for  a  violation  of  right,  unattended  by  any 
of  those  circumstances  of  aggravation  which  give  the  control 
of  the  matter  to  the  jury«  Tliese  are,  by  far,  the  most  diffi- 
cult to  reduce  to  settled  principles  ;  they  can  hardly  be  said 
to  be  included  under  contract. 

§  268.  In  all  cases  of  contract  the  great  object  of  the 
court  is  to  ascertain  the  agreement  of  the  parties,  and  that, 
once  arrived  at,  as  a  general  rule  controls  the  measure  of 
remuneration.  But  this  principle  is  liable  to  some  modifi- 
cations; as, 

1.  In  the  case  of  unconscionable  bargains.  Where,  for 
instance,  in  shoeing  a  horse,  the  contract  was  to  give  a  bar- 
leycorn for  the  first  nail,  two  for  the  second,  four  for  the 
third,  and  so  on,  doubling  each  time  for  thirty-two  nails. 
The  sum  thus  agreed  to  be  paid  would  be  enormous  ;  and  the 
court,  in  the  exercise  of  a  power  devolved  upon  it  by  neces- 
sity, would  direct  the  giving  a  fair  reasonable  compensation. 

2.  The  second  modification  or  exception  embraces  all 
covenants  of  wari'anty  on  sale  of  real  estate.  In  such  case, 
the  rule  is  different  in  England  and  in  this  country.  In  the 
former  the  ordinary  principle  upon  which  damages  are  given 
is  carried  out,  and  those  recoverable  consist  of  the  actual 
injury  sustained.  But  in  this  country  the  measure  of 
damages  is  held  to  be  the  re-payment  of  the  sum  of  money 
paid,  together  with  the  interest  thereon,  from  the  time  of  its 
payment.  The  reason  of  this  deviation  from  the  rule  with 
us  is,  that  in  a  country  so  rapidly  developing  as  our  own, 
no  one  would  sell  land  with  covenants  of  warranty,  if  in  case 
of  failure  of  title  he  was  to  be  held  responsible  for  all  tho 
consequential  damages. 


116  MEASUKE   OF  DAMAGES. 

3.  Tho  third  exception  eml^aces  all  that  class  of  cases 
where  tlio  contract,  hcirif^  performed  only  in  part,  the  court 
undertakes  to  dis^jcnse  with  the  remainder  of  the  agreement, 
and  to  give  compensation  for  what  has  been  actually  done. 
Tlie  following  instances  will  illustrate  this  class  :  A  agrees 
to  work  for  B  for  a  specified  time  for  a  given  sum,  and  quits 
his  employment,  without  B's  consent,  before  the  time  ex- 
pires. 

A  agrees  to  erect  a  building  for  B  according  to  certain 
specifications.  The  work  is  done,  but  the  specifications  are, 
in  many  instances,  dej^arted  from. 

In  these,  and  such  like  cases,  where  the  plaintiff  is  en- 
titled to  recover,  the  agreement  of  the  parties,  so  far  as  it 
can  be  followed,  must  always  be  taken  to  furnish  the  meas- 
ure of  remuneration. 

§  269.  If  a  contract  be  broken  and  the  party  entitled  to 
the  benefit  of  it  can  protect  himself  from  the  loss  consequent 
on  its  breach,  at  a  trifling  expense,  or  \^dth  reasonable  exer- 
tions, it  is  his  duty  to  do  it ;  and  he  can  charge  the  delin- 
quent party  with  such  damages  only  as  with  reasonable 
endeavors  and  expense  he  could  not  prevent. 

QUESTIONS. 

What  is  the  primary  object  to  be  attained  in  the  constmction  of 
contracts  ?  "What  is  the  first  defence  that  may  be  interposed  ?  "What 
the  first  inquiry  imder  it  ?  What  the  answer  ?  "What  the  illustration  ? 
"What  rule  relating  to  the  manner  of  performance  ?  "When  in  the  alter- 
native where  the  right  to  elect  ?  "Where  in  alternative,  and  one  branch 
cannot  be  performed  ?  What  rule,  when  one  of  two  things  to  be  done 
by  a  certain  day  ?  How  must  contract  be  performed  ?  What  illustra- 
tions ?  How,  when  an  act  is  to  be  done  to  enable  the  other  party  to 
perform  the  contract  ?  What  rule  as  to  time  of  performance  ?  What 
does  the  term  month  mean,  and  what  exception  ?  "What  is  the  rule 
when  time  is  computable  from  an  act  done  ?  How  can  a  party  render 
himself  immediately  liable  when  an  act  is  to  be  done  at  a  future  time  ? 
What  will  excuse  non-performance?  How  when  a  party  absolutely 
engages  to  do  an  act  ?  What  illustration  ?  How  where  the  contracting 
party  is  alone  competent  to  perform  ?    What  is  the  rule  where  the  con- 


DEFENCES   TO    ACTIONS.  117 

tract  is  entire?    How  may  a  claim  pro-tanto  sometimes  arise ?     IIow 
where  there  is  a  condition  precedent  ?     "Where  tlicre  are  concurrent 
considerations?    TThore  there  arc  independent  considerations?     What 
will  justify  a  party  in  rescinding  ?     "What  will  justify  a  total  abandon- 
ment?   "What  is  the  rule  where  there  exists  the  right  to  rescind? 
"What  illustration  ?    In  what  party  only  docs  the  right  to  rescind  vest  ? 
"When  is  it  to  be  exercised  ?    "When  may  the  party  immediately  abandon 
the  contract?     What  is  necessary  to  enable  a  party  to  rescind  and  re- 
cover back  money  ?     How  may  a  further  performance  of  a  contract  bo 
sometimes  excused  or  discharged  ?     What  illustration  ?    What  rule  to 
test  parties'  right  to  rescind?    What  to  be  done  on  rescinding  contract 
of  sale  ?    Wliat  defence  may  be  next  interposed  ?    To  whom  may  pay- 
ment bo  safely  made  ?    When  is  there  a  difference  in  the  effect  of  part- 
payment  made  or  promised  for  the  whole  debt  ?     What  effect  has  the 
receipt  of  one  thing  in  satisfaction  for  another  ?     What  the  acceptance 
of  a  new  security  ?     What  of  part  payment  and  release  ?    What  the 
promise  of  part,  the  \»hole  being  due  ?     When  may  payment  be  pre- 
sumed?    What  illustrations?    When  arise  questions  of  application  of 
payments?    What  is  the  right  of  the  debtor,  and  when  to  be  exercised? 
What  presumption  may  circumstances  raise ?     What  instance?     What 
is  the  right  of  the  creditor,  and  under  what  circumstances?    IIow,  when 
debt  is  barred  by  statute   of  limitations?    And  with   what  effect? 
When  cannot  creditor  make  application?     How,  where  neither  debtor 
nor  creditor  makes  application?     What  instances?    When  only  does 
the  doctrine  of    application  arise?    What  rule  when  an  agent  has 
blended  a  demand  due  his  principal  with  one  due  to  himself?     How  is  a 
receipt  regarded  in  law,  and  subject  to  what  ?    IIow  if  in  the  nature  of 
a  contract  ?     What  is  accord  and  satisfaction  ?    What  is  the  rule  as  to 
accord  without  satisfaction  ?     When  is  an  accord  to  render  satisfaction 
at  a  future  day  effectual  in  barring  an  action  ?    When  is  a  substituted 
executory  agreement  a  good  defence  ?    When  is  there  a  merger  ?    How 
must  satisfaction  be  to  be  sufficient  ?    In  what  two  modes  may  a  release 
bo  given  ?    How  should  it  be  ?    W'hen  and  liow  may  a  parol  contract  be 
released?    When  may  a  contract  under  seal  ?     What  effect  has  a  com- 
position arrangement  between  debtor  and  creditor?     Why?     When 
cannot  creditor  recover  balance  when  a  part  of  the  debt  is  paid  ?    What 
is  the  general  principle  as  to  a  sealed  executory  contract  ?     What  after 
breach  ?    What  unneccessary  to  constitute  release  ?    What  must  exist 
as  to  intention  ?     What  effect  of  covenant  not  to  sue  ?     What  of  in- 
demnity ?     Upon  what  does  release  operate  ?     What  effect  of  release  by 
one  of  several  joint  debtors?     What  to  one  of  several  joint  debtors? 
What  to  representative  of  deceased  joint  debtor?    What  instance  of 


118  .  MEASURE  OF  DAMAGES. 

release  or  discharge  by  operation  of  law  ?  "Wliat  effect  has  material 
alteration  in  instrument  and  by  whom  ?  And  slight  alteration  and  by 
whom  ?  "When  is  alteration  presumptively  made  ?  What  effect  has  the 
pendency  of  another  action  for  same  cause  ?  "What  the  obtaining  of 
judgment?  "What  the  rule  in  case  of  arbitrament  and  award?  "What 
necessary  to  make  a  good  tender  ?  "What  effect  has  statute  of  limita- 
tions? "What  does  it  do  in  reference  to  the  debt?  "When  does  it  com- 
mence running?  When  in  case  the  contract  is  to  do  an  act  at  a  future 
time  ?  "When  in  case  of  indemnity  ?  "When  in  case  of  surety  ?  "When 
in  case  of  goods  consigned  to  factor  ?  "When  in  case  of  promissory  note 
on  demand  ?  "What  exception  ?  How  long  does  statute  run  ?  What  is 
the  rule  when  the  debtor  is  absent  or  non-resident  ?  What  will  revive 
a  debt  barred  by  statute  ?  IIow  must  the  promise  be  ?  What  is  the 
recovery  dependent  upon  ?  What  illustrations  ?  What  necessary  in 
the  State  of  New  York?  What  effect  has  part  payment  of  debt? 
What  necessary  to  have  this  effect?  How  may  part  payment  be? 
"What  the  presumption  in  case  of  endorsement  spn  note?  What  effect 
upon  joint  debt  of  part  payment  by  joint  debtor?  What  is  a  set  off? 
Is  it  obligatory  to  set  it  up  ?  What  is  not,  and  what  is,  necessary  in 
order  that  there  may  be  a  set  off?  What  does  recoupment  consist  in  ? 
"What  case  will  illustrate  ?  What  principles  settled  in  relation  to  it  ? 
What  is  the  only  compensation  which  the  law  can  offer  ?  "What  can 
chancery  ?  When,  and  under  what  circumstances,  is  a  sum  certain  in- 
serted in  an  instrument  to  be  considered  as  a  penalty,  and  when  as 
liquidated  damages  ?  What  is  the  leaning  of  the  law  ?  What  general 
principles  deducible  from  the  cases  ?  ■  When  is  the  entire  claim  for 
damages  ?  What  are  nominal  damages  ?  What  rule  of  the  civil  law  as 
to  limit  of  compensation  ?  When  may  extent  of  liability  depend  upon 
peculiar  circumstances,  and  what  ?  How  and  for  -^that,  are  damages 
given  in  case  of  wrongs  ?  How  in  cases  of  contract  ?  What  is  the  rule 
as  to  giving  loss  of  profits  by  way  of  damages  ?  "When  are  damages 
occurring  subsequent  to  commencement  of  suit  to  be  given?  What 
consequences  of  act  complained  of  are  recoverable  ?  What  three  classes 
of  cases  are  there  in  which  questions  concerning  damages  may  arise? 
What  controls  in  all  cases  of  contract?  "What  modifications  of  the 
principle  ?  What  the  rule  when  a  party  can  protect  himself  by  a  slight 
expense  ? 


KINDS   OF   NEGOTIABLE   PAPEE.  119 

CHAPTER  II. 

NEGOTIABLE     PAPER. 

Tliis  is  the  great  instrument  of  commerce,  and  the  im- 
portance of  the  functions  performed  by  it  in  tlie  mercantile 
world  renders  it  difficult  to  understand  how  it  could  have 
been  possible  for  the  ancients  to  have  carried  on  their  busi- 
ness transactions  without  its  use.  It  seems  to  have  com- 
menced its  agency  on  the  coasts  of  the  Mediterranean  in  the 
fourteenth  century,  and  from  that  period  to  the  present,  it 
has  been  growing  in  importance  as  the  business  affairs  of 
the  world  have  increased  in  number  and  magnitude.  To 
the  merchant  and  man  of  business  it  now  presents  a  branch 
of  the  law,  the  accurate  knowledge  of  which  may  be  well 
deemed  a  necessity, 

Tlic  origin  of  the  principles  that  apply  to  negotiable 
paper  shows  its  peculiar  mercantile  character.  With  the 
exception  of  a  few  legislative  enactments,  they  are  all  de- 
rived from  mercantile  usage,  from  the  custom  of  merchants, 
which  in  this  department  of  the  law  has  always  been  per- 
mitted to  control,  subject  only  to  legislation.  Tliis  custom 
or  usage  has  here  given  that  definiteness  and  extreme  preci- 
sion which  is  elsewhere  due  to  legislative  enactment. 

PART  I. 

rra  different  kinds,  their  forms  and  parties. 

§  270.  The  Bill  of  Exchange  is  the  original  germ  from 
which  all  the  different  kinds  of  negotiable  paper  have  pro- 
ceeded. All  the  essential  principles  that  have  an  application 
to  the  latter  have  grown  out  of  the  use  and  full  development 
of  this  instrument.  And  yet  there  is  quite  an  apparent 
difference  between  two  at  least  of  the  fonns  of  this  kind  of 
paper.  Li  order  more  clearly  to  present  tliis  subject  I 
Bhall  give  first  the  forms  of  the  three  different  kinds  that 


120  -SVUAT   IS   A   BILL   OF   EXCLLLNGE  ? 

are  the  most  commonly  in  use,  viz.  :  the  Bill  of  Exchange, 
the  Promissory  Note,  and  the  Check. 

BILL  OF  EXCHANGE. 

Nkw  Yoek,  June  1,  1860. 
$100. 

At  siglit,  (or  on  demand,  or  at days  after 

sight,  or  at days  after  date,)  pay  to  James  Taylor,  or 

order,  (or  hearer,)  one  hundred  dollars  for  value  received. 

John  Steakns. 
To  Mr.  Thomas  Jones,  Merchant  at  Buffalo,  N.  Y. 

PROMISSORY  NOTE. 

New  Yoek,  June  1,  1860. 
$100. 

Two  months  after  date,  I  promise  to  pay  James 
Burt,  or  order,  one  hundred  dollars  value  received. 

Chakles  Sand. 

CHECK. 

New  Yoek,  June  1,  1860. 
Mechanics  and  Farmers  Bank  pay  to  L'a  Shafer, 
or  bearer,  one  hundi'ed  dollars. 
$100.  Le^t  Waed. 

§  271.  A  hill  of  exchange,  in  its  simplest  form,  is  a  written 
order,  or  open  letter  of  request  written  by  one  merchant  and 
directed  to  another,  requesting  him  to  pay  a  sum  of  money 
therein  mentioned  to  a  third  merchant  or  his  order  or  to 
bearer.  The  writer  of  it,  John  Stearns,  is  called  the  Draiver, 
the  person  to  whom  it  is  directed,  Tliomas  Jones,  the 
Drawee,  and  the  person  in  whose  favor  the  bill  is  drawn,  or 
to  whom  the  money  is  to  be  paid,  James  Taylor,  the  Payee. 
The  theory  of  it  is  that  Tliomas  Jones  the  Drawee,  is  in- 
debted to  John  Stearns,  the  drawer  in  the  sum  of  $100,  and 


PAETIES  TO  NEGOTIABLE  PAPER.  121 

Jolin  Stearns,  owing  a  similar  debt  to  James  Taylor,  avails 
himself  of  this  instrumentality,  to  pay  his  own  creditor  by 
transferring  to  him  a  debt  due'  to  himself.  The  payee, 
Taylor,  by  taking  this  open  letter  to  the  drawee,  Jones, 
receives  his  $100,  transferring  to  him  the  bill,  as  his  voucher 
for  its  pa}anent,  and  thus  both  debts  are  paid. 

§  272.  Almost  the  entire  transactions  of  the  mercantile 
world  are  based  upon  credit,  and  hence  the  evidences  of 
debt,  when  put  into  a  negotiable  fonn,  perform  a  function 
among  business  men  more  important  than  money.  It  is 
upon  this  principle  that  the  bill  of  exchange  receives  its 
further  development,  by  means  of  which  its  great  utility  as 
a  commercial  instrument  is  secured.  This  development  is 
commenced  by  the  draioee^  Tliomas  Jones,  who,  when  it  is 
drawn  upon  time,  instead  of  paying,  accepts  it,  by  writing 
across  the  face  of  the  bill  "  Accepted,"  and  signing  his 
name.  We  have  now  another  party  to  the  bill,  or  rather  a 
transformation  of  one  party  into  another  ;  for  Jones,  at  first 
a  drawee,  has  now  become  the  acceptor.  This  act  of  accept- 
ance fixes  his  liability,  and  gives  to  him  as  a  party  on  the 
bill  the  character  of  principal  debtor.  He  admits  his  in- 
debtedness to  the  drawer  by  his  acceptance. 

§  273.  The  bill  having  now  a  party  on  it  who  admits 
himself  a  debtor  and  joromises  to  pay  his  debt,  is  in  a  fitting 
condition  to  be  launched  into  the  business  world,  and  to 
enter  upon  its  mission  as  an  instrument  of  commerce. 
James  Taylor,  the  i)ayee,  has  now  in  his  possession  an  agent 
that  will  either  command  money,  or  become  itself  a  substi- 
tute for  it.  To  enable  it  to  accomplish  this  purpose,  he 
writes  his  name  across  the  back  of  the  bill,  and  thus  adds  a 
new  party,  or  rather  transforms  i\\Q  payee  into  the  indorser. 
He  then  delivers  it  to  another  party,  by  way  of  paying  a 
debt,  or  purchasing  goods,  or  procuring  money  upon  its 
discount,  and  this  last  is  termed  the  indorsee^  or  more  gen- 
erally the  holder.  Tliis  one  may  do  the  same  to  another,  and 
so  on  ad  infinitum.    These  constitute  all  the  parties  to  the  bill. 


122      riiOMISSORY   KOTE  EE8EMBLES  BILL  OF  EXOllANQB. 

§  274.  A  promissory  note  is  a  promise  in  writing  to  pay 
a  Bpeeilicd  sum,  at  u  time  therein  limited,  or  on  demand, 
or  at  Bight,  to  a  person  therein  named,  or  to  his  order,  or 
hearer.  Tliis  has  no  apparent  analogy  to  a  hill  of  exchange, 
and  has  never  heen  recognized  at  connnon  law  as  any  thing 
more  than  a  contract.  An  attempt  was  made  in  the  time 
of  Lord  Holt,  to  place  the  promissory  note  on  the  same 
footing  as  the  bill  of  exchange,  and  render  it  transferable 
by  the  custom  of  merchants,  but  it  utterly  failed.  The 
necessity  of  bringing  it  within  that  custom,  and  thus  of 
enabling  it  to  fulfil  the  purposes  of  negotiable  paper,  led  to 
the  passage  of  the  statute  of  Anne,  which  placed  promissory 
notes  on  the  same  footing  with  bills  of  exchange.  Tliis  statute 
has  in  sul)stance  been  re-enacted  in  most  of  the  States, 
but  in  some  few  of  them  it  has  not,  and  in  all  such  they 
remain  the  same  as  before  the  statute  of  Anne,  the  rights 
and  liabilities  of  an  indorser  being  the  same  as  those  of  the 
assignor  of  a  bond.  Jn  a  promissory  note,  the  signer,  Charles 
Sand,  is  called  the  maJcer,  and  James  Burt,  to  whose  order 
it  is  made  payable,  the  payee. 

§  275.  The  promissory  note  in  the  hands  of  the  payee 
becomes  substantially  the  same  as  a  bill  of  exchange  in  the 
hands  of  its  payee ;  the  maker,  by  signing  the  former,  ac- 
knowledging himself  as  the  principal  debtor,  in  the  same 
manner  that  the  acceptor  does  by  accepting  the  latter.  The 
latter,  it  is  true,  has  the  addition  of  the  drawer,  but  his 
rights  and  liabilities  are  substantially  the  same  as  those  of 
an  indorser.  The  payee  of  a  note,  like  that  of  a  bill,  holds 
it  as  an  evidence  of  indebtedness  by  the  maker,  and  may 
transfer  it  for  the  accomplishment  of  his  various  business 
purposes  by  writing  his  name  upon  the  back  of  it,  thus 
transforming  himself  from  payee  into  indorser,  and  ren- 
dering the  party  to  whom  he  delivers  it  the  indorsee  or 
holder.  ' 

§  27G.  Tlius,  however  little  resemblance  there  may  have 
been  between  the  bill  of  exchange  and  the  promissory  note 


CHECK   HOW  ANALOGOUS  TO  BILL  OF  EXCHANGE.         123 

in  their  original  shape,  yet  in  the  hands  of  the  payee  of 
each,  when  ready  to  be  put  into  circulation,  they  are,  in 
principle,  precisely  analogous.  The  analogy  consists  in 
this,  that  the  ])ayee,  and  each  subsequent  indorsee  or  holder 
of  the  note,  by  indorsing  and  delivering  it  to  his  immediate 
indorsee  or  holder,  in  effect  draws  a  new  bill  upon  the 
maker  in  favor  of  the  indorsee  to  whom  he  delivers  it,  and 
who  by  receiving  it,  so  indorsed,  comes  to  occupy  precisely 
the  position  of  the  payee  in  the  bill  of  exchange.  Hence 
both  these  forms  of  negotiable  paper,  in  the  great  offices 
they  perform  in  the  business  world,  are  brought  under  the 
dominion  of  the  same  general  principles  of  law. 

§  277.  A  bank  check  is  a  written  order,  addressed  to  a 
bank  or  a  person  carrying  on  the  banking  business,  directing 
the  payment  of  a  certain  sum  of  money  on  presentment,  to 
a  person  therein  named,  or  to  bearer.  The  law  is  less  clearly 
settled  relating  to  several  points  concerning  a  clieck  than  tlic 
other  two  forms  of  negotiable  paper.  The  first  conflict  in 
decision  relates  to  the  inquiry  whether  a  check,  to  he  such, 
must  necessarily  be  payable  to  bearer ;  or  whether  it  may 
be  payable  to  order  also.  In  Woodruff  v.  The  Merchants 
Bank  of  the  City  of  New  Yorh,  25  Wend.  673,  it  was  held 
that  it  must  be  payable  to  bearer ;  that  making  it  payable 
to  order  rendered  it  a  bill  of  exchange.  But  in  the  matter 
of  Broion,  2  Story ^  C.  C.  Hep.  502,  Judge  Story  inclines  to 
the  opinion  that  it  is  not  requisite  to  a  check  that  it  should 
be  payable  to  bearer  or  on  demand. 

§  278.  Anotlicr  and  more  important  point  of  difference 
relates  to  the  inquiry  as  to  how  far  a  check,  in  regard  to  the 
principles  that  govern  it,  is  to  be  considered  analogous  to 
bills  of  exchange  and  promissory  notes.  In  JLcrlicr  v.  Aii- 
derson,  21  Wc7id.  373,  it  is  placed  in  all  respects  upon  the 
same  footing.  In  the  later  cases  of  Murray  v.  Judah,  G 
Cowen,  490  ;  and  Little  v.  PJuvnix  Banl',  2  Hill,  425,  it 
is  held  that  different  principles  prevail  so  far  as  the  drawer 
is  concerned,  and  that  the  want  of  due  presentment  and 


124  CHECK  now  VAEYING  FEOM  BILL. 

notice  of  non-payment,  will  only  exonerate  the  drawer  so 
far  as  it  occasioned  any  actual  damage  to  him.  These  cases, 
however,  liold  that  the  indorscr  is  on  the  same  footing  in 
all  the  forms  of  negotiable  paper. 

§  279.  It  will  be  seen  that  a  check  is  very  analogous  in 
its  form  to  a  bill  of  exchange.  Tlie  differences  pointed  out 
in  the  matter  of  Brown,  2  Story ,  502,  are — 

1.  That  checks  are  always  drawn  upon  a  bank  or 
banker. 

2.  That  they  are  payable  immediately  on  presentment, 
and  without  days  of  gi-ace. 

3.  That  they  are  not  presentable  for  acceptance,  but 
only  for  payment. 

4.  Tliat  the  omission  to  demand  and  give  notice  could 
only  be  available  as  a  defence  to  the  drawer  so  far  as  he  had 
received  an  injury  thereby.  In  the  recent  case  of  Bowen 
V.  N'eiocll,  4  Seld.  190,  it  is  held  not  material  to  constitute  a 
check  that  it  should  be  drawn  upon  a  bank  or  bankers,  but 
that  it  should  be  payable  immediately  on  presentment.  The 
check,  like  the  bill  of  exchange,  has  its  drawer,  Levi  Ward, 
the  party  upon  whom  it  is  drawn,  usually  a  bank  or  banker, 
and  the  party  in  whose  favor  it  is  drawn,  Ira  Shafer,  the 
drawee. 

§  280.  Bills  of  exchange  are  either  foreign  or  mland. 
K  foreign  bill  is  one  drawn  in  one  country  and  made  paya- 
ble in  another ;  an  inland,  one  drawn  and  made  payable 
in  the  same  country.  A  bill  drawn  in  one  State  and  made 
payable  in  another,  is  a  foreign  bill  of  exchange.  Buckner  v. 
Finley,  2  Peters,  586. 

§  281.  There  maybe  two  classes  of  parties  on  negotiable 
paper.  The  one  embraces  those  who  are  primarily  liable, 
who  are  the  real  debtors,  and  who  are  ahsolutely  liable  for 
the  full  face  of  the  paper  to  the  payee,  indorsee,  or  holder, 
however  he  may  have  neglected  to  demand  payment  and 
give  notice  of  non-payment.  These  are  the  acceptor  of  the 
bill  and  the  maker  of  the  note.     The  other  includes  thos9 


BUSINESS  AND  ACCOMMODATION  PAPEK.  125 

"svho  are  secondarily  liable,  whose  liability  is  contingent^  and 
who  arc  discharged  entirely  if  the  holder  fails  to  make  the 
proper  demand  of  payment,  and  giro  the  required  notice  in 
case  of  non-payment.  These  are  the  indorser  and  drawer. 
This  distinction  must  be  kept  constantly  in  view  in  order  to 
arrive  at  any  satisfactory  understanding  regarding  the  law 
of  negotiable  paper. 

§  282.  There  is  another  divsiion  of  negotiable  paper  im- 
portant to  notice,  and  that  is  into  business  and  accommodor 
Hon.  That  is  termed  husiness  which  is  given  for  value, 
when  the  maker  of  the  note  and  the  acceptor  of  the  bill  are 
really  indebted  to  the  extent  they  profess  to  be  by  making 
and  accepting.  That  is  termed  accommodation  which  is 
given  where  no  debt  is  due,  where  such  maker  and  acceptoi 
make  and  accept  the  paper,  when  they  are  not  indebted, 
and  when  the  object  is  to  enable  the  party  to  whom  it  is 
given  to  sustain  his  credit,  or  to  raise  money  for  the  pur- 
poses of  his  business.  The  first  kind  is  regarded  as  evidence 
of  a  debt  in  the  hands  of  the  payee  ;  and  is  as  available  to 
him  as  to  any  subsequent  i)arty.  The  second  is  evidence  of 
no  debt  in  the  hands  of  the  payee,  and  only  becomes  nego- 
tiable paper  in  the  hands  of  the  party  to  whom  he  transfers 
it  for  value,  and  in  accordance  with  the  purpose  for  which 
it  was  given. 

§  283.  The  general  rule  is  that  parties  who  are  legally 
competent  to  contract  may  become  liable  as  parties  to  nego- 
tiable paper.  Tliere  was  formerly  some  difficulty  as  to  the 
liability  of  coi-porations,  but  they  are  now  regarded  as  com- 
petent in  regard  to  all  matters  within  the  scope  of  their 
coi'porate  powers.  An  apparent  exception  obtains  in  the 
case  of  married  women,  who,  although  competent  in  equity, 
under  certain  circumstances,  to  make  contracts  such  as  will 
bind  them  to  performance  and  payment  out  of  their  sepa- 
rate i)roperty,  are  nevertlieless  not  legally  competent  to 
bind  themselves  by  becoming  parties  to  negotiable  paj^er. 
Erwin  v.  Downs^  15  New  York  licj}.  575. 


12G  liEQUISITES   OF  NEGOTIAULE   I'Al'EK. 

QUESTIONS. 

"Wliat  wns  tlio  origin  of  negotiable  paper?  "What  tlio  germ  from 
wliicli  the  diilVrent  kinds  proceeded?  What  is  a  bill  of  exchange? 
"Who  the  din'oRJit  parties  to  it,  coniiuencing  with  the  party  drawing  it? 
IIow  may  tiio  drawee  become  the  acceptor?  "What  character  does  the 
acceptance  give  to  him  ?  IIow  may  the  payee  become  indorser  ?  "Who 
the  party  to  whom  he  delivers  it  indorsed  ?  "What  is  a  promissory  note? 
IIow  is  that  placed  on  a  footing  with  a  bill  of  exchange  ?  "What  is  a 
promissory  note  in  the  hands  of  the  payee  analogous  to  ?  "When  and 
how  does  it  become  precisely  analogous  to  a  bill  of  exchange  ?  "What  is 
a  bank  check?  "What  the  first  conflict  in  the  cases  relating  to  it  ?  "What 
the  second  point  of  difference  ?  "What  the  points  of  difference  between 
it  and  a  bill  of  exchange  ?  How  many  kinds  of  bills  of  exchange  ?  IIow 
a  biU  drawn  in  one  State  payable  in  another  ?  "What  two  classes  of 
parties  to  negotiable  paper  ?  "What  the  difference  between  the  two  ? 
"What  other  division  of  negotiable  paper  ?  "What  constiti^.tes  the  difference 
between  the  two  ?  "Who  may  legally  be  parties  to  negotiable  paper  ? 
Can  married  women  be  such  parties  ? 

PART  XL 

EEQinSITES   OF  NEGOTIABLE  PAPER. 

§  284.  Altliougli  no  particular  form  of  words  is  required 
to  constitute  a  bill  or  note,  yet  there  are  certain  essentials 
without  which  no  instrument  can  be  negotiable  paper. 
There  must  be  sufficient  in  it  to  make  out  an  07xJer  or  prom- 
ise to  pay,  and  hence  a  mere  acknowledgment  of  a  debt  has 
not  been  deemed  sufficient.  But  a  promise  to  deliver  or 
to  be  accounteible  or  responsible  for  such  a  certain  sum 
of  money,  has  been  held  sufficient.  It  must  be  for  the  pay- 
ment of  money  alone,  but  whether  the  promise  to  pay  "  in 
JjanTc  hills,^^  divests  it  of  the  quality  of  negotiable  paper  or 
not,  has  been  a  question  of  much  difficulty.  In  England  it 
has  that  effect.  In  this  country  the  decisions  are  both 
ways,  although  the  leaning  is  rather  in  favor  of  the  English 
rule.  McCoi'imck  v.  Trotter,  10  Serg.  <£;  Hawle,  94.  I^ry 
V.  I^ousscau,  3  McLean,  106.  It  must  also  be  for  the  pay- 
ment of  a  sum  certain :  thus  a  promise  to  pay  £13,  and  all 


EEQinSITES  OF  NEG0TIAJ3LE  PAPER.  127 

jmes  according  to  rule,  is  no  promissory  note.  Ayrey  v. 
Fearnsides,  4:  Jif.  c&  W.  168.  The  promise  must  be  clogged 
by  710  conditions  or  contingencies.  Nor  must  its  payment 
depend  on  the  sufficiency  of  any  fund  upon  which  it 
is  drawn.  Orders  upon  public  functionaries,  as  upon  the 
Postmaster  General,  are  held  not  negotiable.  Reeside  v. 
Knox,  2  Whart.  233.  A  bill  or  note  must  be  a  "  courier 
without  luggage,"  and  must  tell  its  story  upon  its  face  or 
back.  It  is  designed  to  pledge  only  the  personal  credit  of 
the  parties  to  it. 

§  285.  It  must  be  for  the  payment  of  money  at  all  events, 
and  hence  if  there  be  any  contingency  as  to  its  payment,  it 
is  no  bill  or  note.  Eut  if  made  payable  on  the  happening 
of  an  event,  however  remote,  yet  if  it  be  of  certain  occur- 
rence, the  bill  or  note  is  good,  as  if  made  payable  two  months 
after  the  death  of  the  maker's  father. 

§  286.  Conditions  to  destroy  the  character  of  a  bill  or 
note  need  not  be  on  its  face.  An  indorsement  on  the  back 
of  it  rendering  it  payable  upon  certain  conditions,  and  done 
at  the  time  of  the  making  of  it,  will  have  the  same  effect. 
But  a  contemporaneous  jparol  agreement  can  have  no  such 
effect,  because,  resting  in  parol,  it  is  not  admissible  in  evi- 
dence, nor  would  an  indorsement  which  simply  referred 
to  an  agreement  by  way  of  identification. 

§  287.  A  bill  or  note  must  contain  some  amount,  which 
it  is  usual  to  specify  in  figures  on  the  lower  left  hand  cor- 
ner of  the  instrument  as  well  as  in  writing  in  the  body,  and 
where  there  is  a  difference  between  them,  it  is  the  written 
words  that  control.  A  date  is  also  usually  inserted,  although 
if  omitted  it  dates  from  the  day  on  which  it  was  made.  Tlic 
term  month  means  a  calendar  month,  except  in  New  1l  ork 
by  statute,  for  the  computation  of  interest  it  is  lunar  ;  and 
the  times  for  payment  are  generally  expressed  to  be  on  de- 
mand, at  sight,  a  certain  time  after  sight,  or  a  certain  time 
after  date.     If  no  time  is  specified,  it  is  payable  on  demand. 

§  288,  It  is  usual  to  insert  the  words  'calue  received  in  a 


128  TRAl^SFEK  OF  NEGOTIABLE  PATEE. 

bill  or  note,  Lut  tlicy  arc  unnecessary.  Tlie  contract  em- 
bodied in  negotiable  paper  is  unlike  other  contracts  in  re- 
gard to  the  expression  of  a  consideration.  That  element 
is  introduced  into  other  contracts,  and  forms  a  part  of  them, 
and  nmst  be  alleged  and  proved  in  order  to  their  enforce- 
ment. But  in  every  negotiable  bill,  note,  acceptance,  and 
indorsement,  the  consideration  is  implied.  There  is  always 
a  presumption  of  value  received,  and  hence  the  burden  of 
proof  rests  on  the  other  party  to  rebut  it.  This  exception 
of  presumed  consideration,  the  law  makes  in  favor  of  nego- 
tiable paper,  in  order  to  facilitate  its  transfer  in  the  com- 
mercial world,  by  giving  it  the  character  of  a  safe  security, 
in  the  hands  through  which  it  passes.  These  words  are  not 
usually  inserted  in  checks. 

QUESTIO:ffS. 

What  must  be  made  out  to  constitute  negotiable  paper  ?  Is  promise 
to  deliver,  or  be  accountable  or  responsible,  sufficient?  What  must  it  be 
for  the  payment  of  ?  How  when  it  is  a  promise  to  pay  in  bank  bills  ? 
"What  rule  as  to  payment  of  sum  certain  ?  What  as  to  conditions  or 
contingencies  ?  How  when  drawn  upon  particular  fund  ?  How  with 
orders  upon  public  functionaries  ?  How  must  it  be  made  payable  ?  How 
if  the  event  be  of  certain  occurrence  ?  How  is  it  if  conditions  be  upon 
its  back,  and  when  put  there  ?  How  with  contemporaneous  parol  agree- 
ment ?  How  usual  to  specify  amount  ?  What  the  rule  where  words  and 
figures  differ  ?  What  the  rule  when  date  is  omitted  ?  What  does  term 
month  mean  ?  How  are  times  of  payment  generally  expressed  ?  Are 
words  "  value  received  "  necessary?  Wherein  does  contract  embodied 
in  negotiable  paper  differ  from  other  simple  contracts  ?  Why  the  ezcep- 
tion  in  favor  of  negotiable  paper  ? 

PART  m. 

TEAKSFEE  OF  JTEGOTIABLE  PAPEE. 

§  289.  It  is  in  the  facility  by  which  all  the  rights  of  one 
party  may  be  transferred  to  another,  without  being  clogged 
with  the  defences  to  which  it  may  be  liable,  that  we  find 
the  great  commercial  value  of  negotiable  paper.    At  com- 


TBANSFEK  OF  NEGOTIABLE  PAPEK.  120 

men  law  a  written  contract  cannot  be  transferred  by  the 
original  contractor  to  another,  so  as  to  vest  that  other  with 
a  right  of  action  in  his  own  name  against  the  other  party 
to  the  contract.  Such  assignee  was  not,  however,  without 
remedy,  as  he  might  bring  his  action  in  the  name  of  his  as- 
signor. But  there  was  another  difficulty,  still  more  formid- 
able, and  constituting  a  heavier  clog  upon  the  transfer  of 
this  species  of  property.  That  was  found  in  the  fact  that 
the  assignee  could  only  take  it  subject  to  all  the  equities 
and  defences  that  existed  against  its  enforcement  while  in 
the  hands  of  the  assignor.  It  was  a  courier  clogged  with 
luggage,  and  could  not  be  relied  upon  as  bearing  its  history 
upon  its  face.  These  two  difficulties  would  eflectually  pre- 
vent the  using  of  contracts  as  instruments  of  commerce. 

§  290.  The  law  merchant  steers  clear  of  both  these  diffi- 
culties. A  transfer  by  indorsement,  or  in  some  cases  by 
delivery,  of  negotiable  paper,  enables  the  indorsee  or  holder 
to  avail  himself  of  all  the  remedies  he  may  have  upon  it  in 
his  own  name.  Tliis,  therefore,  is  the  first  right  which  the 
law  nierchant  gives  to  the  holder  of  negotiable  paper  which 
is  denied  to  the  holder  of  other  contracts. 

§  291.  Another  right,  which  is  of  still  greater  import- 
ance, is  that  if  so  transferred  in  the  ordinary  com-se  of 
business,  before  it  is  due,  to  a  person  who  takes  it  bona 
fide,  for  value,  and  without  notice,  he  receives  it  free 
and  clear  of  most  of  the  defences  which  might  have  been 
available  against  it  in  the  hands  of  the  party  from  whom  he 
received  it. 

§  292.  There  is  still  another  point  of  diflerence  impor- 
tant to  notice.  At  common  law  an  ordinary  contract  is 
good  only  as  between  the  immediate  parties  to  it.  On  its 
assignment  and  transfer  to  another,  the  only  immediate  par- 
ties are  the  assignor  and  assignee,  and  hence  the  only 
right  which  the  law  gives  to  the  assignee,  and  which  he  can 
prosecute  in  his  own  name,  is  against  the  assignor.  In  the 
case  of  negotiable  paper,  the  law  merchant  gives  to  the 
9 


130  ESSENITAL   ELEMENTS   OF   INDOKSEMENT. 

party  to  wliom  it  is  properly  transferred,  tlic  same  right  to 
proceed  against  all  the  parties  to  the  bill  or  note,  i)rovided 
all  the  necessary  steps  have  been  taken,  as  the  common  law 
in  other  contracts  gives  him  against  the  immediate  party 
from  whom  he  received  it.  According  to  the  law  merchant, 
every  prior  party  makes  the  same  contract  with  every  sub- 
sequent one,  that  he  does  with  the  party  who  immediately 
succeeds  him. 

§  293.  The  condition  upon  which  the  law  merchant  con- 
fers these  extraordinary  privileges  upon  this  species  of  con- 
tract is  that  it  shall  contain  words  that  render  it  negotiable. 
These  words  are  those  of  "  order^''  and  "  learerP  A  bill, 
note,  or  check,  in  order  to  be  negotiable,  must  be  made 
payable  to  the  payee  named  therein  "  or  order,"  or  to  the 
same  payee,  "  or  bearer."  In  the  case  first  mentioned  it  can 
be  transferred  to  another  only  by  the  indorsement  of  the 
payee,  while  in  the  second  it  may  be  so  transferred  merely 
by  delivery. 

§  294.  The  essential  elements  embraced  in  an  indorsement 
are  time,  place,  party,  mode,  and  eflFect.  In  regard  to  time, 
indorsements  of  bills  are  usually  made;  after  acceptance,  and 
before  payment.  It  is  not  until  after  acceptance,  when  the 
primary  liability  of  the  principal  debtor  is  secured,  that  its 
marketable  qualities  become  complete,  and  it  is  fitted  to 
perform  its  perfect  functions  as  a  commercial  agent.  It  is 
possible,  however,  for  the  indorsement  to  be  made  previous 
to  the  completion  of  the  bill.  This  is  done  by  placing  the 
signature  on  a  blank  piece  of  paper,  which  operates  as  a 
letter  of  credit,  and  authorizes  the  person  to  whom  it  is 
confided  to  insert  whatever  sum  he  may  choose,  and  to 
make  it  payable  at  whatever  time  and  place  he  may  think 
proper.  The  same  general  principle  also  applies  to  promis- 
sory notes.    Jordan  v.  Ifeilson,  2  Wash.  164. 

§  295.  A  bill  or  note  contiimes  legally  transferable  by 
indorsement  after  it  falls  due  and  until  its  payment.  But 
as  there  may  be  a  material  diff'erence  relating  to  the  efi'ect 


PLACE   OF   THE   INDOKSEilENT.  131 

of  the  indorsement,  whetlier  it  ^vas  made  before  or  after  it 
fell  due,  it  is  important  to  notice  that  in  the  absence  of  all 
proof  on  either  side,  the  indorsement  is  presumed  to  be 
made  before  it  falls  due ;  and  hence  if  the  defendant,  in  a 
suit  brought  by  the  indorsee,  sets  up  payment  to  the  original 
holder,  he  must  show  the  indorsement  to  be  made  subse- 
quent to  the  payment.    PinJcerton  v.  Bailey,  8  Wend.  600. 

§  296-.  As  the  law  of  the  Lex  loci  must  control  in  the 
interpretation  of  the  contract,  it  often  becomes  necessary  to 
determine  the^;Z(2C6  of  the  indorsement.  The  rule  is  under- 
stood to  be  that  the  contract  embodied  in  the  indorsement 
is  governed  by  the  laws  of  the  country  where  it  is  made. 
The  next  question  that  occurs  is,  AVhere  is  the  contract  con- 
sidered to  be  made  ?  Is  it  where  the  name  is  actually 
written,  or  where  the  note,  after  being  indorsed,  is  first 
negotiated  ?  If  the  indorser,  at  the  time  he  indorses  it, 
transfers  it  for  value  to  th^  indorsee,  that  is  the  place  of  the 
indorsement.  But  if  it  be  an  accommodation  indorsement, 
it  is  then  considered  as  being  made  at  the  place  where  the 
paper  is  first  negotiated.  Tlius  where  such  a  note,  although 
dated  in  Michigan,  was  first  negotiated  in  the  city  of  New 
York,  it  was  held  that  the  contract  of  indorsement  was  made 
in  Kew  York,  and  therefore  must  be  governed  by  the  laws 
of  that  State.     Cooh  v.  Litchfield,  5  Seld.  279. 

§  297.  An  indorser  may  pay  a  bill  as  such,  and  after- 
wards negotiate  it,  for  his  indorsement  can  give  no  right 
except  against  himself  and  those  whom  he  himself  might 
sue.  If  a  bill  be  paid  at  maturity,  the  parties  to  it  will  be 
discharged,  although,  by  accident,  their  names  should  be 
left  on  the  bill,  and  it  should  subsequently  be  re-issued,  and 
thus  get  again  into  circulation.  But  if  paid  before  it  arrives 
at  maturity,  and  the  person  so  paying  it  allows  liis  name  to 
remain  on  it,  he  runs  the  risk  of  being  subsequently  called 
upon  by  a  hona  fide  holder  to  pay  it.  "  Nothing,"  says 
Baron  Parke,  "  will  discharge  the  acceptor  or  the  drawer, 
except  payment  accordiiig  to  the  law  merchant,  that  is,  pay- 


132  PAYEE  MUST   BE   FIE8T   INDORSEE. 

ment  of  the  bill  at  maturity.  If  a  party  pays  it  before,  lio 
purchases  it,  and  is  in  the  same  situation  as  if  lie  bad  dis- 
charged it."    Morley  v.  Culverwell,  7  M.  d)  W.  174. 

§  208.  Where  a  bill  or  note  is  payable  "  to  order,"  the 
party  Avho  must  indorse  and  put  it  into  circulation  is  the 
payee,  or  person  legally  interested  in  the  instrument,  or  his 
agent.  It  is  only  through  this  avenue  that  title  can  be 
transferred  to  the  first  indorsee,  and  hence  if  that  fails  to  be 
properly  done,  neither  he,  nor  any  subsequent  holder,  has 
any  remedy  against  the  prior  parties  to  the  bill.  It  is  en- 
tirely competent  for  the  properly  authorized  agent  of  the 
payee  so  to  indorse  it  as  to  transfer  the  title,  but  in  such 
case  he  should  expressly  indorse  it  as  agent,  as  A,  agent 
for  B,  or  in  some  way  write  the  name  of  his  principal ; 
otherwise  the  indorsement  would  be  Inoperative.  Thus, 
where  negotiable  paper  is  indorsed  to  or  by  a  bank,  its 
cashier  is  the  proper  officer  or  agent  to  effect  the  transfer 
by  indorsement ;  and  where  a  note  was  indorsed  "  A  B 
cash,"  with  the  intention  of  binding  the  corporation,  it  was 
held  sufficient  for  that  purpose.  Banlc  of  Genesee  v.  Patchin 
Bank,  3  Kern.  309.  And  where  it  is  known  that  the  holder 
of  a  bill  is  entitled  to  it  only  as  agent,  no  one  having  notice 
of  such  fact  should  take  the  same  by  indorsement  from  him 
without  first  ascertaining  the  extent  of  his  authority.  This 
is  more  especially  the  case,  where  by  the  very  terms  of  the 
indorsement,  as,  "  pay  to  A  B,  for  my  use,"  or  "  the  within 
must  be  credited  to  A  B,"  it  is  rendered  sufficiently  clear 
that  the  indorsee  or  holder  is  a  mere  agent. 

§  299.  In  case  of  the  death  of  the  payee,  the  right  of 
transfer  becomes  vested  in  his  personal  representatives, — 
executors  or  administrators.  These,  however,  should  be 
careful  to  make  the  indorsement  in  their  representative 
character,  as  it  is  not  their  title,  but  that  of  their  testator  or 
intestate,  that  they  are  to  transfer.  "WTiere  a  note  or  bill  is 
made  payable  to  two  executors,  as  such,  it  requires  the  in- 


DIFTEKEITT   IIGDES   OF   INDOESEMENT.  133 

dorsement  of  botli  to  transfer  title  to  the  indorsee.  Smith 
V.  Whiting,  9  Mass.  334. 

§  300.  "Where  a  note  or  bill  is  made  j)ayable  to  a  partner- 
ship, it  is  competent  for  one  partner  to  indorse  and  transfer 
it  in  the  name  of  the  firm,  and  thus  to  give  a  good  title, 
even  although  it  be  done  in  fraud  of  the  partnership.  And  if 
the  indorsement  be  not  in  the  name  of  the  firm  by  one  of  the 
partners,  it  will  nevertheless  transfer  title,  and  be  binding 
on  the  partnership,  if  it  be  proved  that  there  has  been  a 
habit  of  so  indorsing  their  bills.  Faith  v.  Richmond,  11 
Adol.  <&  Ellis,  339. 

§  301.  "Where  the  payees  consist  of  several  persons  who 
are  not  partners,  the  right  of  transfer  vests  in  all  collectively, 
and  not  in  any  one  individually,  and  hence  all  must  in- 
dorse it. 

§  302.  In  case  of  the  existence  of  a  trusteeship,  or  where 
a  bill  or  note  is  made  payable  to  "  A  for  the  use  of  B,"  the 
right  of  transfer  exists  only  in  A,  as  he  oidy  has  the  legal 
title.  And  if  a  bill  or  note  be  given  to  a  married  woman, 
or  if  the  unmarried  holder  of  a  bill  or  note  marry,  the  right 
to  transfer  it  during  the  coverture,  or  continuance  of  their 
joint  lives,  devolves  by  the  common  law  upon  the  husband, 
the  mamage  relation  merging  her  legal  existence  in  his. 

§  303.  As  to  the  mode  of  indorsing,  it  is  considered 
sufficient  if  the  indorsement  be  written  in  pencil.  There 
are  two  modes  of  indorsing,  one  of  which  is  termed  "  in- 
dorsement in  blank,"  and  the  other  "  indorsement  in  full." 
The  first  consists  merely  in  writing  the  signature  of  the 
party  on  the  back  of  the  bill  or  note.  This  is  the  signature 
ojf  the  person  to  whose  order  the  bill  or  note  is  made  paya- 
ble, and  if  the  same  be  made  payable  to  A,  to  the  order  of 
B,  it  is  the  latter  who  should  indorse  it  for  transfer. 

§  304.  It  has  been  made  a  cpiestiou  what  is  a  sufficient 
indorsement  in  blank.  In  Fenn  v.  Ilairiso/i,  3  T.  li.  757, 
the  merely  putting  a  nuniber  or  any  private  mark  on  a  bill 
was  held  not  to  be  equivalent  to  an  indorsement.    In  the 


134  EFFECT   OF   THE   TWO   MODES   OF   INDOESEMENT. 

Merchants  Banh  v.  Spicer^  6  Wend.  443,  the  mere  initials 
of  u  person's  name  indorsed  on  a  elieck  were  lield  sufficient. 
The  extrcmest  case  on  this  point,  and  one  that  has  been 
pronounced  a  very  extraordinary  decision,  is  that  of  Brown 
V.  The  Butchers  (&  Drovers  Ban!:,  6  Jlill,  443,  in  which  it 
was  held  that  a  party  placing  the  figures  "  1,  2,  8,"  in  lead- 
pencil,  on  the  back  of  a  bill  by  way  of  indorsement,  was 
sufficient,  although  the  party  possessed  the  ability  to  write. 
§  305.  Tlic  indorsement  "  in  full,"  is  a  restrictive  in- 
dorsement, and  occurs  where  the  paper  is  indorsed  as  made 
payable  to  the  indorsee  or  his  order,  and  then  signed  by  the 

indorser,  as  "  Pay  James  Flynn  or  order. 

Peter  Dunis^." 

The  effect  of  the  two  thus  differs.  After  the  first  in- 
dorsement in  blank  by  the  payee,  or  indorsee,  if  made  pay- 
able to  his  order,  it  is  transferable  afterwards  acl  infinitum 
by  mere  delivery  ;  but  so  long  as  the  bill  or  note  continues 
to  be  indorsed  in  full,  it  can  only  be  transfen-ed  through 
the  indorsement  of  the  indorsee. 

§  306.  As  a  blank  indorsement  is  held  to  transfer  the 
note  or  bill  to  all  the  subsequent  indorsees  in  succession, 
discharged  of  all  obligations  which  do  not  appear  on  its 
face,  it  follows  that  each  indorsee  or  holder,  being  the  abso- 
lute owner  of  the  paper,  may,  if  he  chooses,  protect  himself 
against  any  thing  but  forgery,  in  case  of  loss,  by  wi'iting  an 
indorsement  in  full  over  the  name  of  the  last  indorser  ;  thus 
rendering  his  own  indorsement  necessary  to  transfer  the  title 
to  another.  A  bona  fide  holder  may  thus  convert  a  blank 
indorsement  into  one  in  full,  either  before  or  after  the  com- 
mencement of  a  suit.  Evans  v.  Gee,  11  Peters,  S.  C.  Bep. 
80.  He  may,  if  he  choose,  entirely  stop  the  currency  of 
the  bill  by  giving  a  bare  authority  to  receive  the  money ; 
such  as  "  pay  to  A  for  my  use,"  or  to  "  to  A  B  or  order, 
for  my  use,"  or  to  "A  B  only,"  or  for  "  my  account." 
Sigournij  v.  Lloycl,  8  B.  cJ&  C.  622.      But  although  such 


THE   TWO   OFFICES   OF   TUE   IXDOKSEMENT.  135 

holder  may  restrict  the  negotiability  of  the  paper,  or  even 
suspend  it  entirely  by  writing  over  the  blank  indorsement 
an  assignment  to  himself,  yet  he  has  no  authority  to  wi-ite 
over  it  a  guaranty  or  any  special  contract ;  nothing  but 
what  the  strict  terms  conceded  by  the  law  merchant  to  ne- 
gotiable paper  will  permit.  But  although  the  payee  has  it 
in  his  power  by  a  special  indorsement,  to  restrain  the  nego- 
tiable quality  of  the  bill  or  note,  yet  no  subsequent  indorsee 
can,  by  such  an  indorsement,  do  more  than  to  protect 
himself  and  the  parties  subsequent  to  him,  as  the  holder 
may,  if  he  chooses,  strike  out  all  the  indorsements,  except 
that  of  the  payee,  and  then  recover  against  him  and  all  the 
prior  parties.  Smith  v.  Clarlc,  Pedke^  225.  The  payee  may 
also  annex  a  condition  to  his  transfer,  and  if  it  be  done  be- 
fore acceptance,  and  the  drawee  afterwards  accept  it,  the 
acceptance  will  be  subject  to  the  condition.  A  bill  before 
acceptance  may  be  indorsed  for  only  a  part  of  the  sum  for 
which  it  was  drawn,  and  then  if  afterwards  accepted,  it  is 
done  so  subject  to  such  indorsement ;  but  no  indorsement. 
after  acceptance^  can  be  made  for  less  than  the  full  sum 
appearing  due,  because  that  would  subject  the  acceptor  to 
two  actions,  when  by  his  acceptance  he  only  rendered  him- 
self liable  to  one.     Douglass  v.  Wilkeson,  6  Wend.  G37. 

§  307.  In  regard  to  the  effect  of  an  indorsement,  it  per- 
forms two  distinct  and  independent  offices,  the  one  to  trans- 
fer the  title  to  the  indorsee,  and  the  other  to  incur  a  condi- 
tional liability  on  the  part  of  the  indorser.  It  is  in  theoiy 
precisely  analogous  to  a  new  bill  drawn  by  the  indorser 
upon  the  acceptor  or  maker.  By  simply  indorsing  and 
delivering  to  the  indorsee,  a  contract  is  made  with  the  latter, 
and  every  subsequent  holder  : 

1.  That  the  instrument  itself  and  all  the  preceding  sig- 
natures are  genuine. 

2.  Tliat  his  title  to  the  bill  or  note  he  indorses  is  good, 

3.  That  he  is  legally  competent  to  bind  himself  by  the 
bill  or  note  as  indorser. 


130  INDOKSEJIENT   BEFORE   A^D   AFPEK   DUE. 

4.  That  the  acceptor  or  maker  is  competent  to  bind  liim. 
self  to  the  payment,  and  will,  upon  due  presentment,  pay  it 
at  maturity. 

5.  That  if,  when  duly  presented,  it  is  not  paid  by  the 
maker  or  acceptor,  he  will,  upon  due  and  reasonable  notice 
given  him  of  the  dishonor,  pay  the  same  to  the  indorsee  or 
other  holder. 

§  308.  No  consideration  need  be  shown  to  hold  the  in- 
dorser,  nor  can  the  want  of  consideration  be  set  up  as  a 
defence  where  the  holder  has  taken  it  lona  fide^  before  due, 
and  for  value.  And  even  where  a  note  is  indorsed  for  the 
accommodation  of  the  maker,  and  therefore  without  any 
consideration,  such  indorser  is  liable  to  the  indorsee,  al- 
though all  the  facts  were  known  to  the  latter  when  he  took 
the  note.     Brown  v.  Mott^  7  John.  361. 

§  809.  It  makes  a  material  difference,  as  to  the  effect  of 
an  indorsement,  whether  it  was  done  before  or  after  the  bill 
or  note  was  due.  K  before,  the  party  receiving  it  takes  it 
upon  the  credit  of  the  paper  alone,  and  is  not  bound  to  in- 
quire into  any  equities  or  defences  that  may  be  interposed 
by  prior  parties.  He  is  unaffected  by  them,  and  hence  if 
the  bill  or  note  were  fraudulently  obtained  or  even  stolen, 
it  is  no  defence  as  against  such  bona  fide  holder  for  value 
received  before  it  fell  due.  Tlie  necessities  of  commerce 
have  given  to  such  a  holder  rights  thus  perfect  and  complete. 
But  if  he  receives  it  after  due,  the  whole  thing  is  then 
changed.  It  is  then  termed  disgraced ;  there  is  presump- 
tively some  reason  why  it  was  not  paid  at  maturity  ;  the 
fact  of  its  being  overdue  is,  of  itself,  accounted  such  a  sus- 
picious circumstance,  as  makes  it  incumbent  on  the  party 
receiving  it  to  satisfy  himself  that  it  is  a  good  one,  and  if 
he  omit  to  do  so,  he  takes  it  only  on  the  credit  of  his  in- 
dorser, and  occupies  precisely  the  position  of  the  party  hold- 
ing it  at  the  time  it  fell  due.  He  receives  it,  therefore,  sub- 
ject to  all  objections  relating  to  want  of  consideration,  ille- 
gality, and  all  other  possible  objections  and  equities  affecting 


-    DEFENCES   TO    NEGOTIABLE   PAPEK.  137 

the  instrument  itself,  and  to  which  it  was  liable  in  the  hands 
of  the  partjr  from  whom  he  takes  it.  But  where  it  is  nego- 
tiated in  season,  it  may  afterwards  pass  from  one  indorsee 
to  another  after  it  is  due,  and  the  holder  will  be,  equally 
with  the  first  indorsee,  protected  in  his  title.  It  follows  as 
a  consequence  from  this,  that  if  a  bill  be  presented  for 
acceptance  before  it  becomes  due,  which  is  refused,  of  which 
the  holder  neglects  to  give  notice  to  the  drawer  and  prior 
indorsers  by  which  they  are  discharged  ;  yet  if  before  it  falls 
due  he  transfers  it  to  an  innocent  holder  for  value,  who  is 
ignorant  of  the  laches,  he  can  recover  against  such  di*awer 
and  indorsers. 

§  310.  It  is,  however,  understood  that  when  a  party 
receives  a  bill  or  note  overdue,  he  is  clothed  with  all  the 
advantages  of  the  party  from  whom  he  receives  it ;  and 
hence  where  a  party  sues  the  acceptor,  it  was  held  that  if 
the  person  who  indorsed  the  bill  to  him  could  himself  have 
maintained  an  action  upon  it,  the  defendant  could  not  set 
up  in  defence  that  it  was  given  for  a  debt  contracted  in 
smuggling,  although  it  was  indorsed  to  the  plaintiff  after  it 
had  become  due.     Chalmers  v.  Lanion,  1  Cam,]).  383. 

§  311.  As  regards  the  equities  and  defences  with  which 
a  party  receiving  it  after  due  is  chargeable  with  notice,  it  is 
limited  to  such  as  arise  out  of  the  bill  or  note  transaction 
itself ;  and  hence,  where  in  a  note  negotiated  after  due,  the 
maker  sets  up  a  claim  of  set-off  due  to  him  from  the  indorser 
while  he  held  it,  and  claiming,  that  although  arising  out  of 
a  matter  collateral  to  the  note,  it  was  yet  admissible  as  a 
defence  against  the  holder,  it  was  held  inadmissible.  Bur- 
roitgh  V.  Moss,  10  B.  &  C.  558.  This  is  the  rule  in  force  in 
Pennsylvania.  Hughes  v.  Laye,  2  Ban\  103.  Also  in 
Connecticut  and  New  Hampshire.  But  in  New  York,  by  a 
provision  in  the  Revised  Statutes,  and  in  ]\[assachusetts,  by 
subsequent  adjudication,  the  right  of  set-off  has  been  greatly 
enlarged. 

§  312.  The  importance  of  the  fact  as  to  whether  a  note 


138  DEFENCES   TO   NEGOTIABLE   TAl^ER. 

is  ovcrdno  or  not  fit  tlic  time  of  its  transfer  has  led  to  the 
inquiry  "when  a  note  payable  07i  demmid  is  to  hc^eonsidered 
as  due  ;  and  the  rule  is,  that  the  transfer  of  such  note  is  not 
to  have  attached  to  it  the  consequences  of  a  note  overdue 
without  some  proof  that  payment  has  been  demanded  and 
refused,  or  that  a  considerable  time  bas  elapsed  since  its 
execution  and  delivery.  The  rule  laid  down  by  C.  J.  Shaw 
in  Sylvester  v.  Crapo^  15  Pick.  92-3,  is  that  a  note  payable 
on  demand  is  payable  within  a  reasonable  time  ;  that  after 
the  lapse  of  such  reasonable  time  it  is  to  be  deemed  over- 
due and  dishonored,  and  that  what  is  a  reasonable  time  is  a 
question  of  law  on  the  facts  proven.  The  burden  of  j)roof 
in  sucb  cases  lies  on  the  defendant. 

§  313.  It  must  not,  however,  be  assumed  as  true  that  a 
party  can,  under  all  circumstances,  receive  a  note  or  bill 
before  it  falls  due,  and  yet  remain  unaffected  by  any  de- 
fences that  may  be  set  up  against  it.  The  rule  is,  that  if  the 
bill  or  note  is  taken  under  such  circumstances  as  would 
naturally  excite  suspicion,  and  induce  any  reasonable  man 
to  inquire  fully  into  sucb  equities  or  legal  defences,  it  admits 
the  defence  to  be  set  up,  as  where  an  accommodation  note 
was  made  to  be  discounted  at  a  bank,  and  tbe  maker  having 
failed  to  get  it  so  discounted,  not  being  a  lottery  dealer, 
took  it  with  the  bank  marks  upon  it  to  a  lottery  dealer,  and 
sold  it  for  lottery  tickets,  it  was  held  in  favor  of  the  accom- 
modation indorser  that  the  occupation  of  the  maker  and  the 
bank  marks  upon  the  note  were  sufficient  to  put  him  on  in- 
quiry, and  hence  that  he  took  it  subject  to  the  defence  of 
misapplication.     Brown  v.  Taber,  5  Wencl.  566. 

§  314.  The  two  functions  performed  by  the  indorsement, 
the  one  of  transfer  and  the  other  of  incurring  liability,  may, 
so  far  as  the  first  is  concerned,  be  separated  from  the  other, 
and  exist  without  it.  Thus  an  infant  may  indorse  a  bill  or 
note  so  as  to  transfer  title,  but  incurs  thereby  no  liability, 
while  the  rigbt  of  the  bolder  remains  perfect  against  all  the 
other  parties.     So,  also,  there  may  be  a  qualified  indorse- 


mDOESEMENT  HOW  LONG  REVOCABLE.  139 

ment,  wluch  transfers  the  title  without  creating  any  liability. 
This  is  done  by  inserting  in  the  indorsement  itself  "  at  his 
own  risk,"  or  "  without  recourse."  Tlie  effect  of  such  an 
indorsement  is  to  transfer  the  title  so  completely  as  to  give 
the  transferee  a  perfect  right  as  against  all  the  other  parties 
to  the  paper,  while  the  indorser  remains  exempt  from  liabil- 
ity by  the  terms  of  his  special  contract. 

§  315.  A  question  has  arisen  as  to  the  effect  of  an  indorse- 
ment after  a  note  becomes  due  ;  whether  such  indorsement 
follows  the  nature  of  the  original  contract,  or  becomes,  as 
between  indorser  and  indorsee,  a  new  draft  on  the  maker  for 
the  money  in  his  hands,  and  is  thus,  in  all  respects,  a  new 
contract,  which  may  be  made  negotiable  or  otherwise,  as  the 
parties  may  choose.  Thus  Messrs.  J.  W.  &  K,  Leavitt 
made  their  note  for  $1570.52  payable  to  the  order  of  "  T. 
Putnam  &  Co.,"  the  defendants.  A  few  days  after  its  matu- 
rity the  defendants  thus  indorsed  it :  "  Pay  the  within  to  A. 
Thacher,  value  received,  May  21,  181:8.  T.  Putnam  &  Co." 
Thacher  indorsed  without  recourse  to  the  plaintiff.  It  was 
held  that  the  indorsement  of  a  negotiable  note  is  negotiable 
without  words  of  negotiability,  so  that  a  subsequent  holder 
may  sue  in  his  own  name,  either  upon  the  note  or  indorse- 
ment. That  such  indorsement,  although  made  after  dishonor, 
follows  the  nature  of  the  original  contract,  and  is  negotiable 
unless  it  contain  express  words  of  restriction.  Leavitt  v. 
Putnam,  3  Comst.  494. 

§  316.  A  bill  or  note  payable  "  to  bearer,"  is  transferable 
by  mere  delivery  without  indorsement ;  yet  if  it  be  in- 
dorsed, the  indorser  is  liable  as  upon  a  new  bill  to  bearer. 
Brush  V.  Reeves,  3  John.  439.  An  indorsement  continues 
revocable  until  delivery  to  the  indorsee ;  hence  the  delivery 
is  as  essential  as  the  indorsement  to  pass  the  title,  and  in  a 
case  where  a  person  deceased  had  written  his  name  upon  a 
bill  payable  to  order,  and  after  his  death  the  executor  de- 
livered the  bill  to  the  plaintiff,  held  that  no  title  was  ac- 
quired ;  so  that  indorsement  of  a  bill  payable  to  order, 


140      EFFECT   OF   TAKLN^O   BILL   OE   NOTE   ON    PRIOR   DEBT. 

without  delivery,  or  delivery  •without  indorsement,  is  insuffi- 
cient to  pass  the  legal  title.  Clark  v.  S'igourny,  17  Conn. 
511. 

§  317.  A  question  of  great  interest  and  importance  has 
arisen  and  been  differently  decided,  regarding  the  effect  of  the 
note  or  bill  of  a  third  person  indorsed  and  delivered  over 
by  a  debtor  to  his  creditor  on  account  of  his  debt — whether, 
and  under  what  circumstances,  such  a  transfer  will  ex- 
tinguish the  debt,  and  if  not,  what  effect  is  attributable  to 
it.  In  the  United  States  Courts,  and  in  those  of  several  of 
the  States,  the  doctrine  is  well  settled,  that  such  a  note  does 
not  extinguish  the  precedent  debt,  unless  it  be  paid  at 
maturity,  or  unless  it  be  so  expressly  agreed  at  the  time  it 
is  received.  But  in  some  of  the  States,  as  Massachusetts, 
Maine,  YermDnt,  such  transfer  h  prima  facie  to  be  received 
as  payment.  In  cases  where  it  does  not  operate  as  payment, 
it  suspends  the  remedy  upon  the  debt  until  the  bill  or  note 
falls  due  ;  and  then  the  holder  cannot  proceed  against  the 
original  debtor  for  the  recovery  of  his  debt  without  showing 
that  he  has  used  due  diligence  to  obtain  payment  from  the 
party  to  the  bill  or  note,  and  if  the  defendant  was  also  a 
party  he  must  show  that  he  had  due  notice  of  the  dishonor. 
And  if  he  fails  to  take  the  requisite  steps  (hereafter  men- 
tioned) to  fix  the  liability  of  the  parties  on  the  paper,  so 
that  his  debtor  loses  his  remedies  against  them,  he  will  also 
lose  all  remedy  against  the  debtor  on  his  debt.  In  regard 
to  its  operating  as  pavment,  it  is  now  held  to  be  matter  of 
presumption^  and  in  the  State  of  New  York  where  the  bill 
or  note  is  received  on  a  precedent  debt,  the  presumption  is 
that  it  was  not  taken  in  payment,  and  the  onus  of  estab- 
hshing  that  it  was  agreed  to  be  so  taken  is  uj)on  the  debtor. 
But  where  it  is  received  contemporaneously  with  the  con- 
tracting of  the  debt,  the  presumption  is  that  it  was  agreed  to 
be  taken  in  payment,  and  the  burden  of  proving  the  contrary 
rests  on  the  creditor.     Noel  v.  Murray^  3  Kern.  167. 

§  318.  Another  question,  depending  very  much  upon  the- 


ACT   OF   INDOESING   SQIILAK   TO   DEAWDfG   BILL.  141 

manner  in  which  tlie  last  is  settled,  relates  to  the  effect  of 
such  a  transfer  in  creating  the  creditor  such  a  Ijona  fide 
holder  for  value  as,  if  he  took  the  same  before  due,  "^vould 
enable  him  to  resist  successfully  any  equities  or  defences 
that  may  be  interposed  in  defence.  If  the  effect  of  the 
transfer  do  not  operate  as  a  payment  or  extinguishment  of 
the  debt,  then  there  is  no  sufficient  consideration,  and  he 
cannot  occupy  the  position  of  such  a  honafide  holder,  but 
if  it  be  received  in  satisfaction  and  discharge  of  the  debt, 
there  is  then  such  a  valuable  consideration  as  will  constitute 
him  such  a  holder.  Thus  when  a  note  for  the  makers  ac- 
commodation is  transferred  by  him  before  maturity  to  a 
judgment  creditor  as  security  for  the  judgment  in  consid- 
eration of  the  discontinuance  of  proceedings  supplementary 
to  execution,  it  was  held  a  valuable  consideration.  Boyd 
V.  Cunrmings^  17  2^.  Torlc  Bc^p.  101. 

The  doctrine  that  requires  the  note  to  be  received  in 
satisfaction  of  the  debt  in  order  to  constitute  a  hojia  fide 
holder,  and  to  protect  him  against  prior  equities,  is  not  entire- 
ly acquiesced  in,  as  there  is  authority  to  the  effect  that  a  mere 
transfer  of  the  note  as  collateral  secm'ity  upon  a  pre-existing 
debt,  and  without  any  other  consideration,  will  have  the 
like  effect.  Swift  v.  Tyson^  16  Peters,  1.  But  this  position 
is  completely  overturned  in  the  State  of  IsTew  York  by  two 
cases  decided  in  its  highest  com-t.  Coddington  v.  Bay,  20 
John.  637.     Stallar  \^2fcDonald,  6  EiU,  93. 

§  319.  The  ^ct  of  indorsing  is  so  very  similar  to  that  of 
drawing  a  bill  that  it  draws  after  it  all  its  legitimate  con- 
sequences, and  it  has  been  held  that  an  indorser  stands  in  all 
respects  in  the  same  situation  as  a  drawer,  and  that  all  the 
consequences  follow  which  attached  to  the  situation  of  the 
latter.  Ballingalls  v.  Gloster,  3  Bast.  4S3.  The  contract 
of  the  one  is  so  similar  to  that  of  the  other,  that  the  indorser 
is  said  to  be  the  drawer  of  a  new  bill,  and  in  a  case  in 
which  the  indorser  pleaded  that  he  did  not  draio  the  hill,  it 
was  held  good  in  substance,  the  indorsee  being,  in  contem* 


14:2  DEI.lVKUif     WITHOUT    IJjUKMiSING. 

plation  of  law  regarded  as  a  new  drawer.  Allen  r.  Walker, 
2  M.  (&  W.  317. 

§  320.  The  indorsement  itself  is  always  regarded  as  evi- 
dence of  an  undertaking  to  pay  money  upon  a  consideration 
received  by  the  indorser.  The  Caywja  County  Bank  v. 
^Yarden,  2  8eld.  19.  The  effect  of  the  indorsement  is 
always  to  create  a  valid  contract  between  the  indorser  and 
his  immediate  indorsee,  and  hence  in  an  action  by  the  hona 
fide  assignee  of  a  promissory  note  against  the  assignor,  it  is 
held  no  defence  that  the  note  was  originally  given  by  the 
maker  to  the  defendant  for  an  illegal  consideration,  the  as- 
signment of  the  note  being  itself  a  contract  which  prima 
facie  imports  a  good  consideration.  Johnson  v.  Dickson,  1 
Blacks.  256. 

§  321.  The  effect  of  the  mere  delivery  of  a  bill  or  note 
without  indorsement  is  not  to  exempt  the  party  from  all 
obligations  or  responsibilities,  unless  by  special  agreement 
to  the  contrary.  The  party  so  delivering  incurs  the  following : 

1.  He  warrants  by  implication  that  he  is  a  lawful  holder 
and  has  a  good  title  to  the  instrument,  and  a  right  to 
transfer  it  by  delivery. 

2.  He  warrants  the  genuineness  of  the  instrument,  that 
it  is  neither  forged  nor  fictitious. 

3.  He  warrants,  in  like  manner,  that  he  has  no  know- 
ledge of  any  facts,  which  prove  the  instrument,  if  orig- 
inally valid,  to  be  worthless,  either  by  the  failure  of  the 
maker,  or  by  its  being  abeady  paid,  or  otherwise  to  have 
become  void. 

QUESTIONS. 

"What  two  difficulties  prevent  tlie  using  of  contracts  as  instruments 
of  commerce  ?  What  the  difference  in  this  respect  between  contracts 
and  negotiable  paper  ?  What  the  diflference  in  regard  to  equities  or 
defences  that  may  be  set  up  ?  What  the  difference  in  relation  to  par- 
ties to  the  contract?  What  is  the  condition  upon  which  the  law  con- 
fers extraordinary  privileges  upon  negotiable  paper  ?  What  are  words 
of  negotiability?  What  the  difference  between  being  payable  "to 
order  "  and  "  to  bearer  "  2    What  are  the  essential  elements  embraced  in 


QUESTIONS   RELATING   TO   INDOKSEMENT.  143 

the  indorsement?  When  are  indorsements  usually  made?  "When  do 
the  marketable  qualities  of  negotiable  paper  become  complete  ?  At 
what  early  period  can  an  indorsement  be  made  ?  How  is  it  then  made  ? 
How  does  it  then  operate  and  what  does  it  authorize  ?  How  long  does 
negotiable  paper  continue  transferable  by  indorsement  ?  When  is  the 
indorsement  presumed  to  be  made  ?  When  is  the  contract  of  indorse- 
ment considered  to  be  made  ?  Can  an  indorsee,  after  paying,  again  in- 
dorse and  negotiate  ?  What  is  the  difference  between  payment  before 
and  at  maturity  ?  Who  is  the  necessary  party  to  indorse  a  bUl  or  note 
payable  to  order?  Through  what  avenue  is  title  transferred  to  the  in- 
dorsee ?  How  should  an  agent  indorse  ?  In  case  of  death  of  payee  who 
should  indorse  ?  How  should  they  indorse  ?  Where  paper  is  made  pay- 
able to  two  executors  as  such,  how  should  it  be  indorsed  ?  How  when 
payable  to  a  partnership  ?  When  good,  if  in  the  name  of  one  of  the 
partners  ?  How  to  be  made  if  payable  to  several  persons  not  partners  ? 
How  in  case  of  trusteeship  ?  How  if  payable  to  A  for  the  use  of  B  ? 
How  if  given  to  a  married  woman  ?  How  may  a  signature  be  written  to 
be  good  ?  What  two  modes  are  there  of  indorsing,  and  what  called  ? 
What  does  the  first  consist  in  ?  What  is  a  sufficient  indorsement  in 
blank  ?  What  is  an  indorsement  in  full  ?  What  is  the  difference  be- 
tween the  two  indorsements  ?  What  are  the  rights  of  the  holder,  and 
how  may  he  protect  himself?  What  is  the  limitation  as  to  what  he 
may  write  over  the  name  of  the  indorser  ?  Who  alone  can  restrain  the 
negotiable  quality  of  the  bill  or  note  ?  What  may  subsequent  indorsee 
do  ?  What  is  the  right  of  the  holder  ?  May  a  payee  annex  conditions 
and  with  what  effect  ?  May  a  bill  be  indorsed  for  a  part  of  the  sum  for 
which  it  was  drawn  ?  Any  difference  in  regard  to  that  whether  done 
before  or  after  acceptance,  and  if  any  what  ?  What  two  offices  are  per- 
formed by  indorsing  ?  What  is  it  analogous  to  in  theory  ?  What  does 
the  indorser  contract  to  do  by  indorsing  and  delivery  to  indorsee  ?  And 
with  whom  is  his  contract  made  ?  Is  any  consideration  necessary  to 
hold  indorser  ?  Where  cannot  want  of  consideration  be  set  up  ?  Any 
difference  in  effect  of  indorsement  whether  done  before  or  after  bill  or 
note  fell  due  ?  IIow  if  before  ?  How  if  after  ?  Suppose  it  first  negoti- 
ated in  season,  how  then  ?  What  follows  by  way  of  illustration  ?  With 
what  advantages  is  a  party  clothed  who  receives  bill  or  note  after  due  ? 
What  the  rule  of  limitation  relating  to  equities  and  defences  as  to 
party  receiving  it  after  due  ?  When  is  a  bill  or  note  payable  on  demand 
considered  as  due  ?  May  negotiable  paper  be  received  before  due,  and 
yet  subject  holder  to  equities  and  defences  ?  Under  what  circumstances 
may  it  be  so  received  ?  What  instance  in  illustration  ?  Can  a  bill  or 
note  be  indorsed  to  transfer  title  without  incurring  liability  ?    How  in 


141  BILL   BEFORE   ACCErTAUCE. 

case  of  infam  ?  1  low  by  a  qualified  indorsement  ?  What  the  effect  of  in- 
lorscincnt  after  note  becomes  due  ?  How  is  indorsement  of  negotiable 
note  held  ?  How  is  j)ai)er  payable  to  bearer  transferable  ?  How  if  it  be 
indorsed  ?  How  long  does  an  indorsement  continue  revocable  ?  "What 
is  essential  to  pass  title  ?  What  instance  in  illustration  ?  What  effect 
has  paper  of  a  third  person  transferred  on  account  of  debt  ?  When 
does  it  extinguish  the  debt  ?  What  effect  when  it  docs  not  operate  as 
payment  ?  What  then  must  holder  do  before  he  can  proceed  against 
debtor  to  recover  his  debt  ?  What  results  if  he  fail  to  take  steps  to  fix 
liability  of  parties  on  the  paper  ?  What  is  now  the  presumption  where 
the  debt  is  antecedent  ?  What,  where  it  is  contemporaneous  ?  In  case 
of  such  transfer  on  account  of  debt  when  is  the  creditor  regarded  as  a 
lona  fide  holder  for  value?  When  not  so  regarded?  What  conse- 
quences follow  indorsing  analogous  to  drawing  bill  ?  What  is  indorser 
said  to  be  ?  How  is  indorsement  always  regarded  ?  What  is  the  effect 
of  the  indorsement  ?  How  regarded  as  between,  the  immediate  parties  \ 
What  are  the  obligations  or  responsibilities  incurred  by  simple  delivery 
unindorsed  ? 

PART  IV. 

DUTIES    OF    THE    HOLDEE    IN    PEESENTIXG   FOE    ACCEPTANCE,    AND    THE 
ACCEPTANCE. 

§  322.  This  part  is  confined  in  its  subject-matter  to  bills 
of  exchange.  Even  checks,  as  such,  are  not  presentable  for 
acceptance  as  distinct  from  payment,  although  the  practice, 
which  is  adopted  in  some  banks,  of  certifying  to  the  good- 
ness of  checks  is,  in  efiiect,  analogous  to  an  acceptance.  Tlie 
holder,  who  may  be  either  the  payee,  or  indorsee,  or  some 
party  who  holds  it  simply  by  delivery,  is  desirous  of  know- 
ing what  step  he  is  next  required  to  take.  Tlie  instrument 
he  holds  has  as  yet  on  it  only  contingent  liabilities.  The 
drawer  has  drawn  it  presumptively  upon  funds  of  his  in  the 
hands  of  the  drawee,  to  whom  he  has  directed  it.  By 
drawing  and  delivering  it,  he  is  understood  to  contract  with 
the  payee,  and  every  subsequent  holder,  that  the  drawee 
will  upon  presentment  and  demand,  accept  and  pay  the  bill 
according  to  its  tenor,  and  that  if  he  fail  to  do  so,  and  the 
holder  gives  him  the  notice  to  that  effect,  required  by  the 


WHEN   BILL   MUST   BE   PRESENTED   FOR   ACCEPTAIfCE.     145 

law-merchant,  he  will  then  pay  the  bill  himself.  Each  in- 
dorser  enters  into  substantially  the  same  contract.  It  is  all 
wholly  contingent,  and  the  obtaining  an  absolute  liability 
by  procuring  the  acceptance  of  the  drawee,  or,  in  case  of 
his  refusal,  the  conversion  of  the  contingent  liabilities  of 
drawer  and  indorsers  into  absolute  liabilities,  is  to  be  the 
work  of  the  holder.  Before  that  is  done,  it  may  be,  and  is, 
a  commercial  agent,  and  by  passing  from  hand  to  hand  may 
purchase  half  the  goods  in  a  commercial  metropolis  ;  yet  it 
is  all  upon  the  faith  and  confidence  that  the  drawee,  when 
applied  to,  will  accept  and  pay  ;  or  if  not,  that  the  drawer 
and  indorsers,  or  some  one  of  them,  will  take  it  up  upon  re- 
ceiving notice. 

§  323.  The  first  inquiry  he  would  be  likely  to  make, 
would  be  to  discriminate,  and  to  learn  in  what  cases  an 
acceptance  inust  be  applied  for,  and  either  obtained  or 
refused,  and  in  what  it  may  or  may  not,  at  his  election. 
Where  he  is  the  holder  of  bills  payable  so  many  days  or 
months  "  after  sight "  or  "  after  demand,"  there  the  only 
mode  of  determining  the  time  of  payment,  is  to  present  for 
acceptance.  But  those  are  the  only  cases  in  which  such 
presentment  is  necessary.  In  bills  payable  so  many  days  or 
months  after  date,  or  at  such  a  period  of  time  in  advance,  it 
is  not  necessary  to  present  for  acceptance.  The  only  thing 
necessary  in  such  case  is  to  wait  the  arrival  of  the  time 
specified,  and  then  present  and  demand  payment.  But  in 
all  such  cases,  the  holder  may,  at  any  time,  present  and  de- 
mand acceptance ;  and  as  the  market  value  of  the  bill  is 
increased  by  having  on  it  the  absolute,  primary  liability  of 
the  acceptor,  in  most  cases  he  will  take  the  steps  necessary 
to  procure  that  liability.  Should  the  holder  stand  in  the 
position  of  an  agent,  he  should  lose  no  time  in  presenting 
for  acceptance ;  because  if  dming  his  delay  the  afiairs  of 
the  drawer  should  become  deranged,  he  might  be  an^er- 
able  in  damages  to  his  prmcipal. 

§  324.  A  question  here  presents  itself  of  great  practical 
10 


140  ELEMENTS   OF   PRESENTATION   FOR   ACCEPTANCE 

importance  ;  and  that  is,  where  a  bill  is  payable  so  manj 
days  or  months  after  sight  or  after  demand,  how  long  is  he 
at  liberty  to  keep  it  before  presenting  it  for  acceptance — at 
what  point  of  time,  should  he  fail  to  procnrc  the  acceptance, 
would  he  lose  his  remedy  against  the  drawer  and  prior  in- 
dorsers.  Some  difference,  as  to  time,  prevails  here  with 
different  kinds  of  bills.  Foreign  bills  of  exchange  may  be 
kept  longer  in  circulation  than  inland.  But  they  should  be 
kept  in  circulation,  as  they  cannot  be  locked  up  for  any 
considerable  period  of  time  without  hazard.  MillisJi  v. 
Rawdon^  2  Moore  &  8.  570.  As  to  inlancl  bills,  a  shorter 
period  is  allowed  ;  but  as  to  neither  can  any  absolute  rule 
be  laid  do-svn.  The  only  rule  is  that  the  bill  must  be 
presented  for  acceptance  within  a  reasonable  time ;  but  what 
that  reasonable  time  is,  must  depend  much  upon  the  cir- 
cumstances of  each  particular  case.  A  different  view  is 
taken  of  this  question,  or  rather  of  the  manner  of  solving 
it,  in  England  and  in  the  State  of  New  York.  In  the 
former,  it  is  regarded  as  a  question  of  fact,  to  be  determined 
by  the  jury,  under  the  direction  of  the  coui't.  In  the  latter, 
as  one  of  law,  to  be  decided  by  the  court.  Aymar  v.  Beers j 
7  Cow.  705.  With  us,  reasonable7iess  of  ti7ne,  where  the 
facts  are  not  in  dispute,  is  always  and  properly  regarded  as 
a  question  of  law. 

§  325.  The  elements  of  person^  time,  and  place,  enter 
into  the  presentation  for  acceptance.  The  person  presenting 
should  be  the  rightful  holder.  But  as  possession  is  p>rima> 
facie  evidence  of  title,  and,  presumj)tively,  has  been  rightly 
attained,  the  drawee,  though  he  accept  a  bill  presented  by  a 
person  having  no  title  to  it,  is  not  precluded  from  subse- 
quently disputing  the  genuineness  of  the  successive  indorse- 
ments. Wliere  a  firm  are  drawees,  a  presentation  to  one 
member  is  sufficient ;  but  where  two  or  more,  not  partners, 
are  drawees,  it  must  be  presented  t6  each,  as  one  has  no 
right  to  bind  the  others  by  an  a(?ceptance.  As  to  time, 
when  the  presentation  is  at  a  bank,  it  should  be  within  the 


dkawee's  duty  on  tkesentation.  147 

usual  banking  hours ;  but  in  other  cases,  it  may  be  done 
during  the  usual  hours  of  business,  which  includes  the  day 
and  evening.  In  reference  to  jplace^  it  should  be  presented  at 
the  residence  or  domicil  of  the  drawee,  without  any  refer- 
ence to  the  place  where  it  is  di-awn  payable  ;  but  if  a  place 
is  specified  on  its  face,  it  should  be  presented  at  such  place. 

§  32G.  On  presentment  for  acceptance  to  the  drawee, 
he,  before  accepting,  should  satisfy  himself  of  two  things, 
1.  Tliat  the  handwriting  of  the  drawer  is  not  a  forgery,  as 
his  acceptance  precludes  him  from  denying  the  genuineness 
of  the  drawer's  signature.  2.  That  he  has  funds  of  the 
drawer  in  his  hands  to  an  amount  equal  to  the  sum  contained 
in  the  bill ;  and  he  is  allowed  time,  if  desired,  to  investigate 
the  state  of  the  accounts  with  the  view  of  determining  this 
question.  K  he  have  such  funds,  and  they  are  immediately 
payable,  he  is  under  no  legal  obligation  to  accept  the  bill. 
No  action  lies  against  him  for  a  refusal,  unless  he  has  re- 
ceived the  funds  for  the  purpose,  or  under  a  promise  thus  to 
accept.  If  an  agent  be  to  accept,  he  should  exhibit  to  the 
holder  his  authority,  and  it  is  for  the  latter  to  determine  its 
sufficiency.  One  partner  may  accept  in  the  name  of  the 
finn,  or  even  an  acceptance  in  his  own  name  is  sufficient, 
provided  the  bill  is  drawn  on  the  firm.  If  drawn  on  two 
or  more,  not  partners,  it  must  be  accepted  by  each. 

§  327.  A  great  questicm  has  been  much  discussed,  both 
in  England  and  in  this  country,  as  to  whether  ^iwomisG  to 
accept  is  to  be  considered  as  equivalent  to  an  acce'ptaMce. 
To  the  production  of  such  a  result  here  the  foUoAving  cir- 
cumstances must  concur : — 

1,  The  paper  containing  the  promise  must  describe  the 
bill  to  be  drawn  in  terms  not  to  be  mistaken,  so  as  to  iden- 
tify and  distinguish  it  from  all  others. 

2.  The  bill  should  be  drawn  within  a  reasonable  time 
afterwards,  and  be  received  by  the  person  taking  it  upon 
the  faith  of  the  promised  acceptance.  Coolidge  v.  Payson^ 
2  WJieat.  QQ.    The  rule  is  applicable  only  to  bills  payable 


148  FORMS   AND   VAKIETIES   OF   ACCEPTAJSTCE. 

on  demand,  or  at  a  fixed  time  after  date,  and  in  no  case  is  a 
verbal  promise  sufficient. 

8  328.  Tlie  law-merchant  prescribes  no  particular  form 
in  which  the  acceptance  shall  be  made.  It  holds  expres- 
sions indicating  an  intention  to  pay  the  bill  when  due,  suffi- 
cient. Every  act  giving  credit  to  the  bill  amounts  to  an 
acceptance.  It  may  be  done  by  parol,  or  in  writing.  It 
"may  be  revoked  at  any  time  before  it  is  communicated  to 
the  holder,  or  the  accepted  bill  delivered  to  him.  The  ac- 
ceptance may  be  inferred  from  the  act  of  the  drawee  in 
retaining  the  bill  long  in  his  possession.  In  'Egw  Tork  and 
some  other  States,  the  mode  is  regulated  by  statute,  3  H.  S. 
68,  5  Ed.  It  must  be  in  writing  and  signed  by  himself  or 
liis  agent.  But  it  shall  be  deemed  accepted  if  the  drawee 
destroy  the  bill,  or  refuse  to  return  it. 

§  329.  The  right  of  the  holder  is  to  have  an  absolute 
acceptance,  which  is  an  engagement  to  pay  the  bill  accord- 
ing to  its  tenor.  If  this  is  declined,  and  any  other  is 
oficrcd,  he  may  refuse  to  receive  it,  and  protest  the  bill  for 
non-acceptance.  But  the  drawee  being  at  liberty  to  accept 
or  not,  is  also  free  to  offer  any  kind  of  acceptance.  He  may 
off'er  to  accept  for  a  part  only  of  the  bill,  or  the  whole,  sub- 
ject to  some  condition  ;  the  most  usual  one,  the  receipt  of 
funds  from  the  drawer.  He  may,  however,  propose  any 
variation  from  the  tenor  of  the  bill,  as  to  sum,  time.,  place, 
or  mode  of  payment.  Upon  receiving  such  an  ofier,  the 
safe  course  for  the  holder  to  pursue,  is  to  give  immediate 
notice  to  the  drawer  and  indorsers  of  the  kind  of  acceptance 
ofi'ered,  and  await  their  direction  whether  he  shall  receive 
it  or  not.  He  has  no  right,  without  theii*  consent,  to  vary 
their  contract,  which  is  that  the  acceptance  shall  be  accord- 
ing to  its  tenor ;  and  yet  aU  parties  may  be  interested  in 
having  the  acceptance  ofi'ered,  received. 

§  330.  "Whatever  qualification  is  introduced  into  the 
acceptance,  if  received,  it  afiects  every  party  to  the  bill 
alike,  so  that  the  holder's  remedy  against  di-awer  and  in- 


EFFECT   OF  ACCEPTANCE.  14y 

dorsers  is  subjected  to  the  contract  embodied  in  the  accept- 
ance. In  case  of  a  conditional  acceptance,  the  holder,  in  order 
to  fecover  against  the  acceptor,  or  against  the  drawer  or  in- 
dorsers,  must  show  perfonnance  of  the  condition.  If  the 
acceptance  be  in  writing,  the  condition,  whatever  it  may  be, 
must  also  be  in  writing,  or  it  will  avail  nothing  to  the  ac- 
ceptor. If,  however,  the  acceptance  be  verbal,  as  the  law- 
merchant  permits,  wherever  it  prevails,  it  is  competent  to 
introduce  any  verbal  condition,  as  that  he  will  pay  the  bill 
when  in  funds.  Mendizilal  v.  Machado^  3  Moore  d;  Scottj 
841. 

§  331.  A  question  hjis  been  raised  in  the  States  of  New 
York  and  Massachusetts,  as  to  the  effect  of  an  anticipated 
acceptance  on  a  forwarder's  receipt  pledged  with  the  party 
discounting  the  bill  on  the  strength  of  such  receipt.  An 
owner  of  flour  in  Rochester  draws  on  his  general  consignee 
in  Albany,  and  taking  the  draft  and  receipt  pinned  to  it 
(the  latter  being  pledged  for  the  former)  to  a  bank  in  Roch- 
ester, obtains  the  money  by  discount.  The  Rochester  Bank 
transmits  both  to  their  collecting  agent  in  Albany,  who 
presents  them  to  the  drawee,  to  whom  the  drawer  was 
largely  indebted  for  previous  advances.  The  drawee  retains 
the  receipt,  disposes  of  the  flour,  applies  the  proceeds  on  his 
previous  advances,  and  refuses  to  accept  the  bill.  The  point 
was  to  whom  the  flour  belonged,  and  it  was  held  to  belong 
to  the  Rochester  Bank.  The  Baiik  of  Rochester  v.  Jones^ 
4  Comst.  497,  overruling  decision  of  the  Supreme  Court  in 
4  Denio  489  ;  see  also  Allen  v.  Williams,  12  Piclc.  297. 

§  332.  The  drawee,  by  accepting,  transforms  himself 
into  the  principal  debtor,  and  precludes  himself  from  setting 
up  in  defence,  as  against  an  innocent  hona  fide  holder  who 
had  received  the  same  in  the  ordinary  course  of  business, 
and  before  due  for  value,  either  that  he  was  an  accommoda- 
tion acceptor,  or  one  witliout  consideration  ;  or,  that  the  sum 
inserted  therein  is  different  from  that  inserted  by  the 
drawer ;  or,  that  the  signature  of  the  drawer  was  forged.  He 


150  ACCErXANCE  SDPKA  PROTEST. 

is  at  liberty,  liowcver,  to  deny  the  signature  of  the  indorser, 
even  tliougli  the  drawer  and  indorser  be  the  same  person  ; 
and,  as  against  the  drawer,  may  set  up  that  it  was  an  ac- 
commodation acceptance.  As  sucli  principal  debtor,  he  can 
only  be  discharged  by  the  bar  of  the  statute  of  limitations, 
or  "by  payment,  or  a  release  ;  and  the  two  latter  are  no  de- 
fence as  against  an  innocent  honafide  holder  who  had  taken 
the  same  for  value  before  it  fell  due. 

§  333.  After  a  general  acceptance  by  the  drawee,  there 
can  be  no  other  acceptor.  But  in  case  of  a  declined  accep- 
tance ,or  an  offer  of  conditional  acceptance  not  received,  any 
friend  of*  the  drawer  or  of  any  of  the  indorsers,  may  offer  his 
acceptance,  ybr*  the  honor  of  his  friend,  which  is  termed  an 
acceptance  Supra  Protest.  It  is  so  termed  because  it  is  only 
done  after  the  Protest,  and  the  object  of  it  is  to  save  the 
credit  of  the  bill,  and  to  prevent  the  parties  upon  it  from 
being  immediately  sued.  It  presents  an  instance  where  the 
law-merchant  allows  what  the  common  law  does  not,  "viz. : 
that  a  stranger  may  voluntarily  constitute  himself  the  cre- 
ditor of  another.  This  species  of  acceptance  may  be  for 
the  honor  of  the  drawer,  or  of  any  one  of  the  indorsers,  and 
if  there  is  no  specification  for  whom  it  is  made,  it  is  consid' 
ered  as  made  for  the  drawer.  An  acceptance  for  the  honor 
of  one  of  the  parties  to  it  may  be  followed  by  a  similar  ac- 
ceptance for  another  or  others.  The  holder  is  not  obliged 
to  receive  this  kind  of  acceptance,  but  may,  if  he  chooses, 
seek  his  immediate  remedy  upon  the  bill.  If,  however,  he 
receives  it,  he  must  treat  the  bill  as  accepted,  giving  the 
credit  it  requires.  This  acceptance  is  done  by  wi-iting  under 
the  prote^  "  accepted  Supra  Protest "  or  "  accepts  S.  P.  for 
the  honor  of ."  This  is  really  an  accommodation  ac- 
ceptance, and  such  an  acceptor  should  give  immediate  notice 
to  the  party  for  whose  honor  he  accepts,  that  he  has  so  ac- 
cepted. The  effect  of  it  is,  that  it  is  a  conditional  undertak- 
ing, and  amounts  to  a  positive  engagement  to  pay  the  bill 
at  its  maturity,  provided  the  drawee  on  application  to  him 


ACCEPTANCE  BUPEA  PEOTEST.  151 

for  that  purpose  declines.  This  devolves  upon  the  holder 
the  liecessity,  when  the  bill  becomes  due,  of  presenting  it 
again  to  the  di'awee  and  demanding  payment ;  of  protesting 
the  same  for  non-jjajment,  and  of  giving  due  notice  to  the 
acceptor  Supra  Protest.  Such  an  acceptor  becomes  liable 
as  a  principal  debtor  to  all  the  parties  to  the  bill  who  are 
subsequent  to  the  one  for  whose  honor  he  accepted  ;  and  if 
he  has  given  the  proper  notice  to  such  party,  he  can  look 
for  his  indemnity  to  him  and  to  all  the  prior  parties  who 
are  liable  to  him. 

QUESTION'S. 

Wbat  contract  and  with  whom  does  the  drawer  make  by  drawing  and 
delivering  the  bill  ?  Who  is  to  convert  contingent  into  absolute  liabilities, 
and  how  ?  "What  is  the  bill  previous  to  this  conversion  ?  What  may  it 
do,  and  upon  what  faith  and  confidence  ?  In  what  cases  mxist  the  accejTt- 
ance  be  applied  for  and  obtained  or  refused  ?  In  what  cases  is  this  optional 
with  the  holder?  What  is  the  duty  of  the  holder  if  he  stands  in  the  posi- 
tion of  agent  ?  What  is  the  rule  as  to  presentment  where  bills  are  pay- 
able so  many  days  or  months  after  sight  or  demand  ?  What  may  create 
a  diflforcnce  as  to  time  in  such  cases  ?  What  is  reasonableness  of  time  a 
question  of?  What  elements  enter  into  the  presentation  for  acceptance  ? 
Who  should  be  the  person  to  present  ?  Suppose  the  person  presenting  has 
no  title  ?  To  whom  presented,  where  a  firm  are  the  drawees  ?  To  whom, 
where  two  or  more  drawees  are  not  partners  ?  At  what  time  should 
presentation  be  made  ?  At  what  place  ?  Of  what  should  the  drawee 
satisfy  himself  before  acceptance  ?  Is  he  under  any  legal  obligation  to 
accept  ?  What,  suppose  an  agent  bo  to  accept  ?  A  partner  ?  Two  or 
more,  not  partners  ?  When,  and  under  what  circumstances,  is  a  promise 
to  accept  equivalent  to  au  acceptance  ?  To  what  kind  of  bills  is  the 
rule  applicable  ?  What  does  the  law-merchant  prescribe  in  regard  to 
acceptance  ?  And  what  amounts  to  an  acceptance  under  it  ?  What  are 
the  provisions  of  the  statute  ?  What  is  the  right  of  the  holder  in  regard 
to  acceptance  ?  Suppose  a  conditional  accei)tance  is  oflfered  ?  What 
may  the  holder  do  ?  What  should  ho  do  to  be  safe  ?  Whom  does  a 
qualified  acceptance  aflfect  ?  IIow  the  remedies  against  drawer  and  in- 
dorsers  ?  What  must  holder  show  in  case  of  conditional  acceptance  ? 
If  acceptance  be  in  writing,  how  must  condition  be  ?  How  if  it  be  ver- 
bal ?  What  effect  is  given  to  forwarder's  receipt,  iiledged  on  a  discount 
of  a  bill  ?  What  case  in  illustration  ?  What  does  drawee  do  by  accept- 
ing?   What  defences  preclude  himself  from  setting  up  and  against 


162  TKESENTATION   FOE   I'AYMENT. 

whom  ?  Wliat  defences  are  availal>le  to  him  ?  IIow  can  ho  be  dis- 
charged ?  "Wliea  are  payment  and  release  no  defence  ?  What  is  an  ac- 
ceptance for  honor^  or  Siijira  Protest  ?  "Why  so  called  ?  What  is  tho 
object  of  it  ?  What  instance  does  it  present  of  variation  of  law-mer- 
chant  from  common  law?  Who  may  it  be  for  the  honor  of  ?  If  no 
speciiication,  fur  whose  honor  is  it  ?  Can  there  be  more  than  one  ac- 
ceptance of  this  kind  ?  Is  the  holder  obliged  to  receive  it  ?  -How,  if  he 
receives  it  ?  How  is  this  acceptance  done  ?  What  is  it  and  what  should 
the  acceptor  do  ?  What  is  the  effect  of  it  ?  Wliat  does  it  devolve  upon 
the  holder  ?  To  whom  does  such  an  acceptor  become  liable,  and  to  whom 
may  he  look  for  indenmity  ? 

PAKT  V. 

DtTTIBS  OF  THE  HOLDEB  IN  PEESENTING  FOE  PAYMENT,  AND  PATilENT. 

§.  334.  The  holder  having  obtained  the  acceptance  of 
the  drawee,  cither  absolute  or  conditional,  or,  in  case  of  his 
refusal,  that  of  some  other,  Supra  Protest,  has  no  other  duties 
in  reference  to  it  devolving  upon  him  until  the  bill  falls  due. 
Then  he  comes  under  obligations  to  present  it  for  payment ; 
and  the  doctrine  here  again  becomes  applicable  to  promis- 
sory notes  and  checks  equally  as  to  bills,  the  difference 
being,  that  in  the  case  of  tho  former,  the  demand  must  be 
upon  the  maker,  and  in  the  latter,  upon  a  bank  or  banker, 
in  the  place  of  the  acceptor.  The  same  steps  to  be  taken  in 
each  case. 

§  335.  The  first  question  that  naturally  arises  relates  to 
the  duty  of  the  holder,  in  order  to  preserve  his  remedy 
against  the  maker  or  acceptor,  where  the  note  or  bill  is  made 
payable  at  a  particular  place.  Does  such  stipulation  form 
such  a  part  of  the  contract,  as  to  require  the  holder  to  com- 
ply with  it  or  lose  all  remedy  against  the  maker  or  acceptor  ? 
This  is  the  English  doctrine  as  settled  in  the  House  of  Lords. 
Rome  V.  Yoimg,  2  Bligh,  391.  Also  in  2  Brod.  c6  Bing.  161. 
But  in  this  country  generally,  see  Wallace  v.  McConnell, 
13  Peters,  136,  the  rule  is  now  understood  to  be,  that,  under 
such  circumstances,  a  neglect  to  demand  papnent  destroys 
no  right  to  proceed  against  maker  or  acceptor  ;  but  if  such 


TIME  OF  PRESENTATION  FOR  rATilENT.  153 

maker  or  acceptor  had  provided  funds  at  such  place  to  pay 
the  note  or  bill,  and  it  was  not  presented,  he  would  be  ex- 
onerated from  the  payment  of  all  interest  and  cost ;  and  in 
case  of  the  loss  of  such  funds  by  the  failure  of  the  bank 
where  they  were  deposited  to  await  the  presentation  of  the 
note  or  draft,  then  such  maker  or  acceptor  would  be  exone- 
rated from  liability. 

§  336.  As  the  failure  to  make  the  demand  of  payment 
does  not  impair  the  right  as  against  the  principal  debtor, 
it  follows  that  the  only  necessity  that  requires  it,  grows  out 
of  relations  existing  between  drawer  and  indorsers  and  the 
holder.  Their  undertaking  to  pay  is  only  contingent  npon 
the  failure  to  do  so  of  the  maker  or  acceptor,  and  hence 
that  failure  together  with  the  proper  notice  of  it,  must,  by 
the  holder,  be  made  clearly  to  aj)pear.  Li  determining  this 
question,  the  elements  of  time,  place,  and  person  are  the 
most  important  for  consideration. 

§  337.  The  thne  for  making  the  demand  is  the  day  on 
which  the  note  or  bill  falls  due.  This  depends  npon  the 
method  of  computing  time,  and  the  allowance  of  days  of 
grace.  When  the  paper  falls  due  a  certain  fixed  period  of 
time  after  date,  the  day  of  the  date  is  excluded  from  the 
calculation.  Where  the  term  ^^months^^  is  made  use  of,  it 
is  the  calender,  and  not  the  lunar,  month ;  although  in  the 
computation  of  interest,  a  month  means  one  twelfth  part  of 
a  year.  Days  of  grace  are  certain  days,  three  in  number, 
added  to  the  time  at  which  the  paper  would  otherwise  fall 
due.  These,  by  the  law-merchant,  are  added  in  all  cases 
where  the  paper  falls  due  at  a  certain  fixed  period  of  time. 
In  all  such  cases  the  paper  is  really  payable  on  the  third 
day  after,  the  day  on  which  it  would  otherwise  fall  due 
being  excluded.  Thus  if  made  payable  on  the  first  of  the 
month,  it  is  not  demandablc  until  the  fourth  of  the  month. 
These  days  are  considered  as  forming  a  pai't  of  the  original 
contract,  and  a  bill  or  note  transferred  at  any  time  before 
the  third  day  of  grace  is  treated  as  negociated  before  due. 


15J:  PLACE  OF  PEE8ENTATI0N  FOR  PAYMENT. 

These  days  arc  not  allowable  on  paper  payable  on  demand, 
or,  where  no  time  of  payment  is  expressed,  or,  w^here  it  is 
payable  iiinnediatcly  on  presentment.  The  law-merchant 
allows  them  where  bills  are  payable  at  sight.  In  some 
States,  as  in  that  of  New  York,  legislation  has  interfered, 
and  taken  them  away  on  all  bills  or  drafts  payable  at  sight, 
and  on  all  checks,  bills  or  drafts  drawn  upon  any  bank  or 
banker,  although  payable  at  a  certain  specified  time  after 
date  or  sight.  If  the  third  day  of  grace  fall  upon  Sunday, 
or  a  gi'cat  national  holiday,  the  law-merchant  makes  the 
paper  payable  the  day  next  preceding. 

§  338.  On  the  last  day  of  grace,  where  these  are  allow- 
able, and  if  not,  on  the  day  when  the  note  or  bill  by  its 
terms  falls  due,  the  payment  must  be  demanded.  A  de- 
mand made  the  day  previous  or  subsequent,  and  not  on  the 
very  day  when  it  is  payable,  destroys  all  remedy  against 
di-awer  and  indorsers.  Tlie  general  rule  is  to  allow  the 
maker  or  acceptor  the  whole  of  the  day  on  which  the  pa- 
per is  payable  to  make  the  payment,  and  hence  a  suit 
brought  on  that  day  is  premature.  As  commercial  paper 
is  mostly  made  payable  at  banks,  the  course  is  to  consider 
the  day  closed  at  the  close  of  banking  hours,  and  immedi- 
ately after  to  hand  it  over  to  the  notary  to  protest  for  non- 
payment. 

§  339.  The  element  of  j9?a(?e  is  one  of  great  importance. 
If  no  place  is  designated  m  the  bill  or  note,  the  holder  must 
look  up  the  maker  or  acceptor,  and  on  the  day  it  falls  due, 
demand  of  him  the  payment  at  his  residence  or  place  of 
business.  If  the  maker  or  acceptor  has  absconded,  that  will 
excuse  the  demand.  K  he  has  removed  from  the  State  since 
the  making  of  the  paper,  the  demand  should  be  made  at  his 
former  place  of  residence.  If  he  has  removed,  but  not  with- 
out the  State,  the  holder  should  use  all  reasonable  diligence 
to  ascertain  where  his  residence  is  and  there  make  the  de- 
mand. Where  the  bill  is  addressed  to  the  drawee  at  a  par- 
ticular place  and  accepted  generally,  the  demand  should  be 


PRESENTATION  OF  LOST  BILL  FOK  PAYMENT.  155 

made  at  the  place  .to  which  it  is  directed.  Tliis  is  usually  a 
question  of  diligence  on  the  part  of  the  holder.  Where  it 
is  made  payable  at  a  particular  place,  as  occurs  Avitli  most 
commercial  paper,  all  that  is  necessary  is  to  have  it  at  that 
place  on  the  day  it  falls  due,  and  ready  to  be  given  up  on 
payment.  No  formal  demand  is  necessary.  And  this, 
although  in  this  country  unnecessary  to  hold  the  maker  or 
acceptor,  is  nevertheless  indispensable  to  hold  the  drawer 
and  indorsers.  "When  a  note  or  bill  is  made  payable  in  a 
particular  city  in  which  the  maker  or  acceptor  does  not  re- 
side, and  specifies  no  place  of  payment,  it  may  be  treated  as 
dishonored  without  any  inquiries,  as  they  must  necessarily 
be  useless. 

§  340.  In  case  of  the  loss  of  a  bill  or  note,  the  demand 
is  done  by  presenting  a  copy  or  written  statement  of  the 
substance  of  the  lost  instrument,  at  the  same  time  making 
proof  of  its  loss,  and  tendering  to  the  maker  or  acceptor  an 
ample  indemnity  against  any  claim  or  demand  that  might 
ever  after  be  made  against  him  for  or  by  reason  of  the  in- 
strument. 

§  341.  There  is  one  contingency  in  which,  so  far  as  con- 
cerns the  drawer,  there  is  no  necessity  of  making  any  pre- 
sentation or  demand,  either  for  acceptance  or  payment,  or 
givmg  to  him  any  notice  in  case  of  refusal  to  accept  or  pay ; 
and  that  is  where  such  drawer  not  only  had  no  funds  in  the 
hands  of  the  drawee  to  meet  the  draft,  but  had  also  no  rea- 
son to  suppose  it  would  be  either  accepted  or  paid.  But 
although  a  neglect  here  may  be  practiced  by  tlie  holder 
■without  losing  his  remedy  on  the  drawer,  yet  this  does  not 
embrace  the  indorser.  He  is  not  affected  by  any  such  con- 
duct on  the  part  of  the  drawer  as  precludes  him  from  taking 
the  benefit  of  the  apparent  laches  of  the  holder.  If  the 
maker  or  acceptor  are  notoriously  insolvent,  that  will  not 
excuse  the  demand.  Even  in  case  of  the  accei^tance  Siq)ra 
Protest,  the  demand  of  payment  on  the  day  the  bill  falls 
due  must  be  made  of  the  drawee,  precisely  the  same  as  if 


156  PERSON   BY   AJ^D  TO   WHOM   PRESENTED. 

he  liad  become  the  acceptor,  because  by  that  time  he  may 
be  in  funds  to  pay  it,  and  the  acceptor  Supra  Protest,  only 
undertakes  tu  pay  in  case  of  his  refusah 

§  3J:2,  The  third  element  relates  to  the  person  by  whom 
and  of  whom  the  demand  of  payment  must  be  made.  The 
person  demanding  should  be  the  holder  or  his  agent.  No 
one  is  competent  to  make  this  demand  who  is  not  also 
legally  competent  to  protest  and  give 'notice  sufficient  to 
hold  drawer  and  indorsers  in  case  of  refusal.  No  mere 
stranger  is  competent  to  do  this.  But  any  one  receiving  it 
by  a  blank  indorsement ;  or  who  has  a  mere  verbal  authori- 
ty, if  in  possession  of  the  paper  ;  or  if  it  has  come  into  his 
hands  by  accident,  as  by  the  death  of  an  agent ;  is  entirely 
competent  for  all  these  purposes.  The  important  feature  is 
the  possession  of  the  paper.  In  case  of  the  death  of  the 
holder,  it  devolves  upon  his  personal,  representative ;  in  case 
of  an  assignment,  to  the  assignee ;  in  case  of  a  trusteeship, 
to  the  trustee;  and  in  case  of  an  insane  person,  to  his 
committee. 

§  3i3.  If  maker  or  apceptor  be  a  firm,  demand  may  be 
made  of  one  of  the  members,  and  in  case  of  the  death  of 
one,  then  of  the  survivor ;  if  there  are  several  makers  or  ac- 
ceptors, not  partners,  demand  must  be  made  of  each ;  and 
in  case  of  death,  of  the  personal  representatives. 

§  344.  The  presentation  and  demand  of  payment  being 
made  of  maker  or  acceptor,  either  one  of  them,  before  com- 
plying, should  be  satisfied  of  two  things. 

1.  Tliat  his  own,  as  also  the  signature  of  the  first  indors- 
er,  if  bill  or  note  be  in  the  hands  of  a  subsequent  party,  is 
genuine. 

2.  That  the  person  demanding  is  entitled  to  receive  it. 
Li  one  respect,  it  is  true  both  these  amount  to  the  same 
thing ;  because  if  the  signatm-e  of  the  first  indorser  is  forged, 
the  only  legitimate  source  of  title  is  destroyed,  and  the 
person  demanding  it  cannot  be  entitled  to  receive  it.  The 
indorser  before  paying  should  be  further  satisfied  that  there 


now   ACTS   OF  HOLDER   AFFECT   INDORSEK.  157 

has  been  no  laches  on  the  part  of  the  holder  or  any  other 
party  ;  because  if  drawer  and  indorsers  have  been  thereby 
discharged,  his  unnecessary  payment  of  it  will  not  revive  the 
liability  of  the  prior  parties,  and  thus  his  remedy  over  will 
be  destroyed.  In  regard  to  the  person  to  whom  the  pay- 
ment is  to  be  made,  that  is  settled  by  the  right  to  demand. 
In  cases  free  from  suspicion,  the  mere  production  of  the  note 
or  bill  indorsed  in  blank  by  the  proper  person,  if  payable  to 
order,  is  sufficient  to  warrant  the  payment.  But  that  pro- 
duction in  all  cases  of  negotiable  paper  should  be  required 
before  payment,  except  where  there  is  proof  of  loss  or 
destruction. 

§  345.  Tlie  payment  must  be  made  in  money,  and  an 
authority  to  another  to  receive  payment  generally,  will  not 
authorize  the  taking  of  goods  in  pajonent.  Even  a  check  is 
regarded  rather  as  a  means  of  procuring  the  money  than  as 
absolute  payment.  But  if  produced  by  the  debtor,  having 
been  drawr».  by  him  and  indorsed  by  the  creditor,  it  is  held 
to  be  evidence  of  payment.     Efjg  v.  Barnet^  3  Esp.  196. 

§  3-lG.  An  important  inquiry  may  arise  in  this  connec- 
tion regarding  the  kind  of  acts  on  the  part  of  the  holder 
that  will  affect  his  remedies  against  the  indorser.  This  in- 
volves the  inquiry  how  far  a  holder  may  go  in  making  new 
arrangements  with  the  principal  debtor  without  prejudicing 
his  rights  against  the  indorser.  Tlie  maker  or  acceptor 
often  desires,  by  giving  some  fresh  security,  or  by  some  other 
means,  to  get  some  indulgence  as  to  the  time  of  payment, 
and  the  question  important  for  the  holder  to  settle  is,  how 
far  he  can  yield  to  the  wishes  of  the  principal  debtor  with- 
out prejudicing  or  destroying  his  right  against  the  drawer 
or  indorser.  Tlio  general  principle  is  that  he  may  do 
whatever  may  tend  to  favor  the  indorser  without  impairing 
any  of  his  rights.  Tlius  he  may  receive  part  payments  and 
any  additional  security  that  may  be  offered.  He  may  stand 
where  he  is  and  take  his  own  time  to  proceed  against  the 
maker  or  acceptor,  and  if  the  indorser  is   apprehensive 


158  WUAT   ACTS   OF   HOLDEK   DISCnARGE   INDOKSEK. 

of  bis  failure,  and  tliiis  of  losing  by  delay,  his  remedy 
lies  in  taking  up  the  paper  himself,  and  then  of  pro- 
ceeding to  collect  it  against  the  principal  debtor.  Tlie 
holder  may  even  go  further,  and  agree  not  to  press  the 
acceptor.  He  may  even  promise,  if  there  is  no  considera- 
tion to  sustain  it,  not  to  take  any  steps  to  enforce  the 
collection — and  all  this  without  impairing  any  right  against 
the  indorscr.  But  he  cannot  make  a  binding  contract  with 
such  maker  or  acceptor,  by  which,  for  an  adequate  consid- 
eration, he  preludes  himself,  even  for  a  day,  from  proceed- 
ing against  him,  without  destroying  all  remedy  he  may 
otherwise  have  against  drawer  and  indorsers.  Any  valid 
agreement  by  which  such  drawer  and  indorsers  are  effectual- 
ly shut  out  from  taking  up  the  bill  or  note  at  any  time,  and 
of  proceeding  immediately  against  the  acceptor  or  maker, 
discharges  them  at  once  from  all  liability.  And  this  agi-ee- 
ment  may  be  made  at  any  time  either  before  the  maturity 
of  the  paper,  or  after  its  dishonor.  But  all  the  elements  of 
a  contract  must  be  fully  established,  as  the  mere  change 
or  addition  of  securities,  or  the  acceptmg  a  collateral  securi- 
ty from  the  acceptor  or  maker,  without  the  agreement  as  its 
consideration,  will  have  no  such  effect.  And  the  entering 
into  a  valid  agreement  with  a  subsequent  indorser  to  give 
him  additional  time  for  payment,  will  not  discharge  a 
prior  indorser,  or  prior  party  to  the  paper,  because  such 
party  can  never  look  to  the  subsequent  one  for  payment ; 
and  hence  any  indulgence  given  to  the  latter,  even  if  he 
be  totally  released,  cannot  in  the  slightest  degree  affect  the 
rights  of  the  former.  So  a  holder  may  enter  into  any  com- 
position with  the  drawer  of  a  bill,  provided  he  gives  up  no 
securities,  without  releasing  the  acceptor.  There  is  one 
mode  by  which  the  holder  can  safely  contract  to  give  time 
to  the  maker  or  acceptor,  and  that  is  by  an  express  reserva- 
tion in  such  contract  of  all  the  rights  of  all  the  other  parties 
to  the  note  or  bill. 

§  3iT.  "When  a  party  to  a  bill  or  note  pays  it  up,  he 


WHEN   PAYMENTS   ]HAT)E   CAN   BE   EECOVEEED   BACK.      159 

should  be  careful  to  do  one  of  two  things,  viz.:  either  have 
the  instrument  delivered  up  to  hiui  to  he  cancelled,  or  have 
his  payment  or  satisfaction  indorsed  u^jon  it.  Otherwise  he 
runs  the  risk  of  being  compelled  to  pay  it  to  some  one  who 
was  a  holder  before  it  became  due.  Woodroffe  v.  Hayne^ 
1  Car.  &.  P.  600. 

§  SiS.  Another  question  of  difficulty  has  presented  it- 
self in  'determining  under  what  circumstances  payments 
made  under  a  mistake,  where  there  has  been  a  forgery,  may 
be  recovered  back.  As  the  drawee  and  acceptor  are  bound 
to  know  the  handwriting  of  the  drawer,  there  has  been  no 
difficulty  in  denying  the  right  of  either  to  recover  money 
paid  under  any  such  circumstances  of  such  drawer ;  but 
the  question  has  arisen,  and  the  difficulty  presented,  as  be- 
tween such  drawee  or  acceptor  and  an  innocent  holder  who 
had  taken  it  for  value  before  due,  and  in  the  ordinary  course 
of  busmess.  The  cases  in  England  have  seemed  inclined  to 
be  governed  by  the  time  at  which  the  discovery  of  the  for- 
gery and  the  demand  of  the  repayment  were  made  ;  allow- 
ing a  recovery  where  tliis  occurred  on  the  same  day  as  the 
payment,  and  denying  it  when  on  the  day  succeeding.  Wil- 
hinsoji  V.  Johnson.,  3  JB.  <&.  C.  428.  Cocks  v.  Masterman^ 
9  B.  c6.  C.  902.  In  this  country  the ,  current  of  decisions 
has  been  guided  by  the  principle  of  presumed  knowedge  of 
handwi'iting  and  of  opportunities  of  putting  that  knowledge 
into  practice ;  and  hence  of  allowing  such  recovery  where 
there  was  no  such  presumed  knowledge,  and  denying  it 
where  there  was.  Tlius,  where  one  of  the  indorsements  was 
a  forgery,  and  the  accej)tor  paid  it  to  an  iimocent  holdei', 
and  afterwards  discovered  the  forgery,  he  was  allowed  to 
recover  back  the  money.  Canal  Bank  v.  Bank  of  Alhany, 
1  JI'dly  287.  But  in  Coggill  v.  The  American  Exchange 
Bank,  1  Comst.  113,  where  the  payee's  name  had  been 
forged  by  the  drawer,  who  had  himself  obtained  and  used 
the  money,  and  the  drawee  paid  it,  and  afterwards  brought 
a  suit  to  recover  back  the  money,  it  was  held  that  he  could 


ICO  PAYMENTS    MADR   WITEN.  EECOVEEED    BACK. 

not  recover.  In  The  Banh  of  Commerce  v.  The  Union 
BanU,  3  Comst.  230,  there  is  a  rule  of  limitation  laid  down 
in  reference  to  presumed  knowledge,  and  although  it  is  ad- 
mitted that  tlie  drawee  presumptively  knows  the  hand- 
writing of  the  drawer ;  and  hence  if  he  pays  money  on  a 
forged  draft,  pays  it  in  his  own  wrong ;  yet  the  reason  of 
the  rule  does  not  extend  to  the  amount  inserted  ;  and  there- 
fore, where  $105  was  altered  to  $1005,  and  the  last  sum  was 
paid,  the  court  allowed  a  recovery  back  of  the  difference 
between  the  true  and  altered  sum.  A  still  further  modifi- 
cation of  this  principle  of  presumed  knowledge  is  found  in 
Goddard  v.  The  Merchants^  Banh,  4  Comst.  147,  in  which 
the  plaintiff  having  assumed  the  place  of  the  drawee,  and 
paid  the  bill  for  the  honor  of  the  drawers,  not  having  seen  it, 
he  was  allowed  (the  drawer's  name  having  been  forged)  to 
recover  back  the  money. 

QUESTIONS. 

What  is  duty  of  holder  when  note  falls  due  ?  "Where  note  or  bill  is 
payable  at  particular  place,  what,  as  between  holder  and  maker  or  ac- 
ceptor, is  the  consequence  of  failing  to  present  it  ?  "What  as  between 
holder  and  drawer  and  indorser  ?  "What  are  the  elements  of  presenta- 
tion and  demand  of  payment?  "What  does  element  of  time  depend 
upon  ?  "When  is  day  of  date  excluded  from  calculation  ?  "When  term 
month  is  used,  what  is  meant  ?  "What  are  days  of  grace,  and  how  many  ? 
"When  in  such  case  is  the  paper  payable?  "When  if  made  payable  on 
the  first  of  the  month  ?  How  are  days  of  grace  considered  ?  "When  not 
allowable  ?  How  when  paper  is  payable  at  sight  ?  What  has  legislation 
done  in  New  York  ?  When  payable,  suppose  day  of  grace  fall  upon  Sun- 
day or  some  holiday  ?  When  must  payment  be  demanded  ?  Suppose 
made  on  previous  or  subsequent  day  ?  When  during  the  day  may  paper 
be  paid?  When  is  day  considered  closed  when  payable  at  a  Bank? 
Where  no  place  of  payment  is  designated,  what  must  holder  do  ?  What 
wiU  excuse  the  demand  ?  How  made  in  case  of  removal  from  the  State? 
How  in  case  of  removal  not  from  the  State  ?  How  where  addressed  to 
drawer  at  a  particular  place  and  accepted  generally  ?  What  is  this  a 
question  of?  How  presented,  and  demand  made,  when  payable  at  par- 
ticular place  ?  What  necessary,  when  payable  in  a  particular  city,  where 
maker  or  acceptor  does  not  reside?    What  necessary  to  be  done  where 


DUTIES  OF  HOLDER.  161 

bill  or  note  is  lost  ?  In  what  contingency  is  no  presentation  and  de- 
mand necessary  as  to  drawer  ?  Has  the  same  thing  application  to  the 
indorser?  "What  necessary  where  there  has  been  acceptance  supra  pro- 
test? "Who  should  the  person  demanding  payment  be  ?  "What  should 
he  be  competent  to  do  besides  making  the  demand  ?  "What  in  relation 
to  making  the  demand,  is  the  important  feature  ?  "Who  makes  it,  in 
case  of  the  death  of  the  holder  ?  Who  in  case  of  an  assignment  ?  "Who 
in  case  of  trusteeship  ?  "Who  in  case  of  an  insane  person  ?  If  maker  or 
acceptor  be  a  firm,  of  whom  is  demand  made  ?  Of  whom  in  case  of  the 
death  of  one  ?  Of  whom  in  case  of  several,  who  are  not  partners  ? 
Of  what  must  acceptor  or  maker  be  satisfied  before  making  payment? 
What  is  all  that  is  essential  in  cases  free  from  suspicion  ?  What  should 
be  required  before  payment  ?  Of  what  must  the  indorser  be  satisfied 
before  payment  ?  And  why  ?  What  must  the  payment  be  made  in  ? 
How  is  a  check  regarded  ?  When  evidence  of  payment,  when  produced 
by  debtor  ?  What  may  the  holder  do  with  maker  or  acceptor,  without 
discharging  drawer  or  indorser  ?  "What  can  he  not  do  without  so  releas- 
ing ?  How  and  when  must  and  may  contract  be  made  having  such  ef- 
fect ?  How  does  agreement  with  subsequent  indorser  aflfect  right  against 
prior  one  ?  For  what  reason  ?  How  may  holder  safely  contract  to  give 
time  to  maker  or  acceptor  without  releasing  indorser  ?  What  should 
party  do  who  pays  up  bill  or  note  ?  What  risk  does  he  run  if  he  does 
not  ?  Can  drawee  or  acceptor  who  has  paid  a  forged  bOl,  by  mistake, 
recover  against  drawer  ?  AYhy  ?  When  so  paid,  what  is  the  current  of 
decisions  guided  by  as  to  such  recovery  against  innocent  holder  ?  In 
what  respect  has  this  principle  received  a  modification  ?  In  what  re- 
spect a  lunitation  ?    What  are  the  cases  in  illustration  ? 

PART  VI. 

DTJTIE3  OF  THB  HOLDER  IN  CASE  OF    EEFTJSAL  TO   ACCEPT  OR  TO  PAT. 

§  349.  The  duties  devolving  on  the  holder  upon  dis- 
honor of  his  paper,  whether  by  refusal  to  accept  or  pay,  are 
substantially  the  same.  The  only  object  accomplished  by 
their  performance,  and  which  they  are  alone  designed  to  se- 
cure, is  the  full  and  perfect  remedy  against  drawer  and  in- 
dorsers.  The  necessity  for  perfonning  them  grows  out  of 
the  distinction  between  the  primary  and  secondary  liabili- 
ties of  the  parties  to  this  kind  of  paper.  Tliose  wlio  are 
pnmarily  liable  continue  so  until  they  arc  legally  discharged 
11 


162  DUTIES  OF  NOTAKY  PUBLIC. 

by  payment  or  otherwise.  As  to  them,  therefore,  nothing 
is  required  to  he  done  by  the  liolder  in  reservation  of  his 
rights.  But  tlie  liability  assumed  by  the  drawer  and  in- 
dorsers  is  only  secondary,  contingent,  and  conditioned  upon 
non-payment  by  the  principal  debtor,  and  notice  thereof 
given  him  in  reasonable  time.  The  object  of  this  is  to  ena- 
ble the  drawer  to  withdraw  his  funds  from  the  possession  of 
tlie  drawee,  and  the  indorser  to  take  such  immediate  steps 
as  he  may  deem  necessary  to  secure  himself  from  loss.  By 
keeping  in  view  the  reason  of  the  rule,  we  shall  be  the  better 
able  to  understand  the  mode  or  manner  in  which  the  law 
requires  this  duty  to  be  performed. 

§  350.  The  holder,  up  to  this  point,  has  been  under  no 
necessity  of  enlisting  in  his  behalf  any  official  services.  He 
could  do  himself  every  thing  that  is  required  to  be  done. 
The  custom,  it  is  true,  is  very  generally  established  and  uni- 
versal among  banks,  to  place  all  negotiable  paper  in  the 
hands  of  the  JSTotary  Public  to  present  for  acceptance  and 
payment,  but  for  this  there  is  no  legal  necessity.  It  is  only 
after  paper  has  been  dishonored  by  a  refusal  to  accept  or 
pay,  that  the  services  of  this  official  are  required.  And  even 
then  they  are  only  necessary  where  a  protest  is  required  to 
be  made.  In  bringing  into  view  the  protest,  we  learn  one 
of  the  important  distinctions  between  the  foreign  and  the 
inland  bill  of  exchange.  The  law-merchant  requires  the 
former  to  be  protested  in  case  of  non-acceptance  and  non- 
payment, while  in  regard  to  the  latter,  no  protest  is  neces- 
sary. AU  that  strictly  constitutes  the  duty  of  tbe  Notary 
is  to  protest,  and  that  in  case  only  of  the  foreign  bill ;  not  to 
give  the  necessary  notices  to  the  drawer  and  indorsers.  In 
practice,  however,  the  whole  business  of  protesting  and 
giving  tbe  notices  is  usually  done  by  the  notary. 

§  351.  Suppose  the  holder  has  done  his  last  personal  act, 
that  is — demanded  acceptance  by  the  drawee,  or  payment 
by  the  acceptor,  which  has  been  refused ;  he  then  places  the 
bill  in  the  hands  of  a  notary  public,  wbo  is  a  public  office, 


WHAT   IS   INCLUDED   UNDER   PKOTEST.  163 

recognized  by  the  law  of  nations,  and  whose  acts  are  attested 
by  a  notarial  seal.  This  officer  again  presents  the  bill  to 
the  drawee  or  acceptor,  and  again  demands  its  acceptance 
or  payment.  If,  however,  he  has  made  the  presentation  and 
demand  originally,  he  need  not  do  it  a  second  time.  All 
th-at  is  necessary  is  that  a  notary  public  should  do  it.  The 
same  day  that  he  makes  the  presentation  and  demand,  he 
notes  the  fact,  or  all  the  facts,  in  writing,  stating  time,  pres- 
entation, demand,  reason  for  refusal,  if  any  is  assigned, 
putting  his  initials  to  the  statement ;  and  from  this  he  after- 
wards draws  up  the  statement,  which  is'a  formal  declaration 
of  presentment  and  refusal,  and  of  the  facts  contained  in  his 
minutes ;  and  bears  date  of  the  time  when  the  noting  was 
done. 

-  §  352.  Two  questions  have  arisen  in  regard  to  the  term 
'potest ;  the  one  relates  to  what  is  necessary  to  be  done  in 
order  to  render  the  protest  complete,  and  the  other  to  what 
is  ordinarily  understood  as  being  embraced  imder  it.  There 
is  still  another  as  to  the  person  legally  competent  to  do  it. 
The  tirst  has  arisen  on  an  inquiry  relating  to  the  sufficiency 
of  the  notarial  certificate.  Here  it  has  been  held,  that  in 
order  to  be  sufficient,  such  certificate,  in  the  case  of  a  foreign 
bill  of  exchange,  must  set  forth  the  fact  specifically,  that  the 
bill  was  presented  to  the  drawee,  at  the  time  when  demand 
of  payment  was  made,  or  it  cannot  be  offered  in  evi- 
dence. Musson  V.  Lake,  4  Sow.  S.  C.  B.  262.  The  other 
question  has  arisen  as  to  the  extent  of  a  waiver  of  protest, 
whether  that  is  limited  to  the  formal  declaration,  or  extends 
to,  and  embraces,  all  the  steps  necessary  to  charge  an  in- 
dorser.  The  indorser  wrote,  "  Please  not  protest  (such  a 
note,  so  due),  and  I  will  waive  the  necessity  of  the  protest 
thereof."  Held,  that  the  term  protest,  in  its  popular  sense, 
includes  all  the  steps  necessary  to  charge  the  indorser,  and 
hence  that  this  was  a  waiver  of  notice  as  well  as  of  presen- 
tation and  demand.  Coddlngton  v.  Davis,  1  Comst.  186. 
The  certificate  of  protest  under  the  notarial  seal  is  sufficient 


\ 


164  WHAT  is'  a  sufficient  notice. 

evidence  of  the  facts  therein  stated.  Another  question  as 
to  whether  the  notary  was  obliged  to  do  the  business  per- 
sonally, or  whether  he  could  transact  it  through  his  clerk 
or  other  agent,  has  been  attended  with  considerable  diffi- 
culty. The  general  impression  is,  that  the  law-merchant 
requires  the  services  of  the  notary  personally  ;  and  in  the 
State  of  'New  York,  that  principle,  together  with  the  word- 
ing of  the  revised  statutes,  has  settled  the  law  to  that  effect. 
The  Onondaga  County  Bank  v.  Bates,  3  Hill,  53. 

§  353.  The  notary  public  is  the  agent  of  the  holder  in 
protesting  the  bill  or  note.  Having  presented  and  de- 
manded acceptance  or  payment,  received  a  refusal,  and 
noted  the  facts  on  the  bill  or  note,  the  next  thing  in  order 
which  should  be  done,  is  the  giving  or  sending  notices 
to  the  drawer  and  indorsers.  One  of  the  most  intricate 
branches  of  the  law,  one  that  has  been  the  most  refined 
upon,  and  sometimes  one  the  most  difficult  to  under- 
stand precisely  what  to  do,  is  that  which  grows  out  of  this 
necessity  of  notice.  The  most  important  points  of  inquiry 
are : 

1.  The  kind  of  notice,  and  its  contents. 

2.  By  whom  and  on  whom  must  the  service  be  made  ? 

3.  When  and  how  must  it  be  served  ? 

§  354.  The  laio  mercliant  leaves  the  kind  of  notice, 
whether  written  or  verbal,  to  the  decision  of  the  party  who 
is  to  give  it.  It  is  sufficient  if  given  in  the  mere  verbal 
form,  or  it  may  be  proved  by  circumstantial  evidence.  Any 
thing  that  will  satisfy  the  jury  as  to  the  fact  of  its  having 
been  given.  K"o  particular  form  of  it  is  necessary.  What 
the  law-merchant  seems  to  consider  essential  is,  that  it  must 
import  either  in  express  terms  or  by  necessary  implication, 
that  the  bill  or  note  has  leen  dishonored.  This  involves 
two  facts : 

1.  That  the  bill  has  been  duly  presented. 

2.  Tliat  there  was  a  refusal  to  pay  it,  or  that  it  has  not 
been  paid.    Mere  notice  that  the  bill  still  remains  unpaid, 


TUE   PKOPEE  PABTY  TO   GIVE  NOTICE.  165 

would  not  be  sufficient,  because  if  it  bad  never  been  pre- 
sented it  might  remain  unpaid  without  being  dishonored. 
The  word  dishonored  seems  to  be  sufficient  to  support  the 
notice.  King  v.  BicTiley,  2  Q.  B.  421.  It  usually  states 
that  the  party  to  whom  it  is  addressed  is  looked  to  for  pay- 
ment, and  this  was  once  deemed  necessary.  Solarte  v.  Pal- 
oner^  7  Biiujh.  530.  But  in  the  case  above  referred  to  of 
King  V.  BicJcky,  it  was  held  not  necessary  in  express  terms 
to  inform  the  party  whom  it  is  intended  to  charge,  that  he 
will  be  looked  to  for  payment,  and  that  the  sending  notice 
of  dishonor  is  sufficient  for  that  purpose.  The  notice  must 
also  be  sufficient  to  ascertain  the  note  or  bill  dishonored. 
But  inaccuracy  of  description,  by  which  the  party  cannot 
be  misled  as  to  the  bill  intended,  is  immaterial.  And  where 
there  is  an  error  in  the  statement  of  the  amount,  in  order  to 
show  that  the  party  could  not  have  been  misled,  it  is  com- 
petent to  prove  that  there  was  no  other  note  in  existence  to 
which  the  description  given  could  have  aj)plied.  Cayuga 
County  Bank  v.  Worden^  1  Comst.  413. 

§  355,  The  notice  must  come  from  the  holder  or  his 
agent,  or  some  person  entitled,  or  who,  as  party  to  the  bill, 
probably  will  be  entitled,  to  call  for  payment  or  reimburse- 
ment. That  given  by  a  mere  stranger  is  insufficient,  and  one 
without  any  signature,  is  worthless.  A  party  who  is  not, 
at  the  time,  the  holder,  may  give  the  notice,  if  he  stands  in 
a  position  in  which  he  may  become  holder,  as  where  he  has 
transferred  it  to  another  as  collateral  security  for  a  debt. 
A  party  to  whom  it  is  indorsed  over  to  collect,  may  give  the 
notice,  and  possession  by  a  notary  is  evidence  of  his  right 
to  protest  it,  and  his  signature  to  the  notice  affords  presump- 
tive evidence  that  it  was  done  by  the  authority  of  the 
holder. 

§  356.  The  holder,  or  whoever  gives  the  notices  on  his 
behalf,  should  give  such  notice  to  all  the  prior  parties  on 
the  note  or  bill,  except  maker  or  acceptor,  to  whom  he  in- 
tends to  look  for  payment.     Tlie  only  one  who  has  engaged 


166  TO   WHOM  NOTICE   SHOULD   BE   GIVEN. 

absolutely  to  pay,  lias  failed  in  doing  so,  and  tlie  only  chance 
now  offered  to  the  holder  to  avoid  the  risk  of  loss,  is  to 
convert  the  contingent  liabilities  of  the  drawer  and  indorsers 
into  absolute  ones  by  the  giving  of  notice.  It  is  left  en- 
tirely to  him  what  parties  he  will  notice.  If  he  is  satisfied 
with  the  responsibility  of  his  immediate  indorser,  he  may 
give  the  notice  to  him  only,  and  then  he,  on  receiving  it, 
must,  in  his  turn,  give  the  notice  to  all  such  prior  parties  to 
whom  he  wishes  to  look  for  payment.  His  position,  upon 
receiving  the  notice,  is  precisely  similar  to  that  of  the  holder, 
and  he  may  notify  all  the  others  before  him,  so  as  to  be  able 
to  look  to  them  all,  or  only  his  immediate  indorser,  and  he 
the  next  in  order,  and  so  on  until  all  have  successivly  re- 
ceived notice.  The  rule,  however,  is  that  a  notice  given  by 
the  holder  enures  to  the  benefit  of  all  who  stand  between 
that  party  and  the  person  receiving  it,  and  a  notice  given  by 
one  party  to  another,  and  communicated  without  ladies  by 
that  other  to  prior  parties,  renders  them  liable  to  him  who 
gave  the  first  notice.  Hence  it  is  laid  down  as  univer- 
sally true,  that  a  party  entitled  as  holder  to  sue  upon  a 
bill,  may  avail  himself  of  the  notice  given  in  due  time 
by  any  other  party  to  it,  against  any  other  person  upon 
the  bill,  who  would  be  liable  to  him,  if  he,  the  holder, 
had  himself  given  him  notice  of  the  dishonor.  Story 
on  Bills,  §  304.  Chapman  v.  Keane,  3  Ad.  c&  Ellis,  193. 
Where  a  firm  indorse,  notice  to  one  of  the  members  is  sufii- 
cient ;  and  so  also  is  notice  to  a  surviving  partner.  But 
where  two  jointly  indorse,  not  being  partners,  notice  must 
be  given  to  each,  and  in  case  of  the  death  of  one,  then  to 
the  survivor  and  the  personal  representative  of  the  deceased. 
Willis  V.  Green,  5  Hill.  232.  In  case  of  the  death  of  the 
indorser,  it  is  the  executor  or  administrator  who  is  entitled 
to  the  notice.  Notice  to  a  general  agent  is  a  sufficient  one 
to  the  principal.  Kotice  must  be  given  to  the  acceptor 
supra  protest  of  non-payment  by  the  drawee,  in  order  to 
hold  him  on  such  acceptance.     So  also  to  the  drawer  and 


TIME  AlTD    MAl^KEK  OF  BEEVTCE.  167 

indorsers,  if,  on  receiving  bucIi  notice  and  demand  of  pay- 
ment, he  declines  to  pay. 

§  357.  The  time  and  manner  of  service  arc  among  the 
most  important  things  relating  to  notice.  The  question  of 
reasonable  notice  is  a  mixed  question  of  law  and  of  fact.  The 
facts  are  for  the  jury  to  find,  while  the  question  of  reasona- 
hleness  of  time,  based  upon  them,  is  for  the  court.  It  is 
difficult  in  practice  for  the  court  to  control  this  question 
where  there  is  any  disj)ute  about  the  facts.  Where  the 
parties  live  in  the  same  village  or  city,  the  notice  is  to  be 
served  personally  on  the  drawer  or  indorser,  or  sent  to 
his  dwelling-house  or  place  of  business.  When  in  places 
remote  from  each  other,  the  manner  generally  of  serving  the 
notice  is  through  the  post-office  ;  and  the  time  at  which  the 
notice  must  be  served  or  left  in  the  one  case,  and  mailed  in 
the  other,  is  substantially  the  same.  It  may  be  done  on  the 
demand,  refusal,  and  protest,  but  it  is  in  time  to  do  it  on 
the  day  following.  It  has  been  made  a  question  -udiether  the 
rule  is  as  strict  as  that  laid  down  in  Lenox  v.  JRoberts,  2 
Wheaton,  373,  which  requires  that  the  notice  should  be  put 
into  the  post-office  earl]/  enough  to  he  sent  hj  the  mail  of  ths 
succeeding  day  /  or  whether  it  is  sufficient  to  place  the  no- 
tice in  the  post-office  on  the  next  day,  at  any  time  of  the 
day,  so  as  to  be  ready  for  the  first  mail  that  goes  thereafter, 
although  it  may  not  be  in  season  for  the  mail  going  out  the 
day  after  the  default.  Tlie  latter  is  now  understood  to  be 
the  rule  in  England,  and  in  some  parts  of  the  United  States. 
It  is  not,  however,  entirely  concuiTcd  in.  Beckwith  v. 
Smith,  22  Maine,  125.  Tlic  question  is  very  elaborately  dis- 
cussed by  Judge  Shepley  in  Chick  v.  Pillshury,  24  Maine, 
458,  in  which  he  contends  for  the  strict  rule  of  sending  out 
by  the  mail  of  the  next  day,  and  this  would  undoubtedly 
be  the  safer  rule  to  adopt  in  practice.  The  notice  is  always 
sufficient  if  left  in  time  at  the  dwelling-house  of  the  party, 
and  if  the  house  be  closed  in  consequence  of  a  temporary 
absence,  it  may  still  be  left  there. 


168  MODES  OF  riioviNa  bekvice  by  mail. 

§  358.  If  tlierc  is  no  jjost,  it  is  sufficient  to  use  the  ordi- 
nary metliod  of  conveyance,  as  in  the  case  of  a  foreign  bill 
to  send  by  the  first  regular  ship.  It  is  not  necessary  to 
resort  to  the  postal  an-angement,  or  to  send  the  notice 
by  the  ordinary  conveyance.  It  is  sufficient  to  send  by  a 
private  conveyance,  or  a  special  messenger,  and  it  would  be 
deemed  a  sufficient  notice  in  such  a  case,  though  it  should 
arrive  a  little  behind  the  mail,  provided  it  were  upon  the 
same  day ;  but  wherever  the  postal  arrangements  are  estab- 
lished, the  mode  of  sending  notice  by  the  mail  cannot  be 
safely  omitted,  unless  under  very  peculiar  circumstances. 
The  service  by  mail  where  the  parties  reside  in  the  same 
city  or  village  is  insufficient,  except  where  there  is  a  penny 
post  arrangement,  or  the  notice  was  actually  received  in 
time.  Under  a  regular  penny  post  arrangement,  the  service 
through  the  mail  is  sufficient,  the  parties  residing  in  the 
same  village  or  city.  Tliis,  however,  must  be  qualified  by 
the  fact  tliat  the  penny  post  goes  to  the  quarter  where  the 
drawer  or  indorser  lives. 

§  359.  In  all  cases  where  the  service  may  be  made  by 
mail,  there  are  two  modes  of  charging  the  drawer  or  in- 
dorser with  notice  ;  the  one  by  proving  that  the  notice  vms 
received  in  time,  by  whatever  mode  it  may  have  been  con- 
veyed, and  the  other  by  showing  that  the  notice  properly 
directed  and  prepaid  was  deposited  in  the  post-office,  to  be 
forwarded  at  the  proper  time.  In  the  latter  case,  the  receipt 
in  time  is  presumed,  and  even  if  it  be  shown  never  to  have 
been  received,  it  is,  nevertheless,  a  sufficient  notice.  The 
holder,  or  his  agent,  has  done  what  the  law  requires  of  him, 
and  if  the  post-office  fails  in  its  transmission  and  delivery, 
it  is  not  chargeable  to  him.  The  rule  is  to  du-ect  the  notice 
to  the  post-office  nearest  the  place  of  residence  of  the  drawer 
or  indorser,  and  if  there  are  two  post-offices,  at  each  one  of 
which  he  is  accustomed  to  receive  letters,  it  may  be  directed 
to  either.  Tlie  question  as  to  which  of  the  two  should  be 
entitled  to  notice,  the  residence  being  where  the  note  was 


DUTY    WHEN   RESTDENCE  TTNKNOWN.  169 

made  payable,  or  tlie  place  of  business  being  a  distant  city, 
came  np  for  settlement  in  Van  Vechten  v,  Pruyn,  3  Kern. 
549,  and  it  was  held  to  be  tlie  place  of  residence.  So  also 
where  the  indorser  received  his  letters  and  did  his  post-office 
business  in  the  town  where  the  note  was  made  payable,  but 
resided  in  an  adjoming  town,  where  the  notice  was  sent  by 
mail,  it  was  held  sufficient.  Seneca  County  Bank  v.  JSTea^s, 
3  Comst.  442.  The  authorities  fail  to  decide  at  w^hat  dis- 
tance from  a  post-office  the  party  may  reside,  and  yet  have 
a  service  through  the  mail  du'ccted  to  him  there,  a  good 
service.  The  only  safe  way,  however,  is,  when  his  residence 
is  some  distance  in  the  countiy,  to  send  out  the  notice  to 
be  served  personally  on  him,  or  be  left  at  his  dwelling- 
house. 

§  360.  The  holder  may  not  know  where  the  drawer  and 
indorsers  respectively  reside,  and  the  inquiry  becomes  im- 
portant what  in  such  case  becomes  his  duty.  This  is 
summed  up  by  saying  that  he  is  bound  to  make  diligent 
inquiry  ;  to  inquire  of  the  persons  by  whom,  and  the  places 
at  which,  this  knowledge  would  be  the  most  likely  to  be 
acquired.  A  delay  beyond  the  time  at  which  he  would 
otherwise  be  required  to  give  notice  may  thus  be  necessarily 
incurred  before  he  is  able  to  give  the  notice.  Such  delay 
will  not  destroy  his  right  against  the  indorser.  Bateman  v. 
Jose2)h,  12  East.  433.  His  plain  duty  is,  as  soon  as  he  ac- 
quires the  knowledge  from  a  competent  source,  to  make  use 
of  it  by  sending  the  notice.  And  if  he  has  thus  acquired 
it,  and  thus  makes  use  of  it,  he  will  hold  the  indorser, 
although  he  sent  to  a  wrong  place,  and  if  subsequently  better 
informed,  will  not  be  obliged  to  send  a  new  notice.  Lam- 
tert  V.  Ghiselin,  9  How.  S.  C.  Bep.  552.  Tlie  latter  part 
of  the  above  proposition  has  not,  however,  been  acquiesced 
in,  and  the  principle  has  been  affinned,  that  inability  to  dis- 
cover the  residence  of  the  indorser  excuses  the  proper  ser- 
vice only  so  long  as  such  inability  continues,  and  that,  when 
the  residence  becomes  known  to  the  party  wishing  to  hold 


170         NOTICES   now   On-EN  BY   SUCCESSIVE   rNT>0RSEE8. 

the  indorscr,  it  is  then  his  duty  to  he  diligent  in  making 
service.  Bcale  v.  ParruJi,  20  N.  Y.  Tiq).  407.  The 
main  point  decided  in  this  case  is,  that,  although  notice  of 
non-payment  given  by  the  holder  of  a  note  to  an  indorser 
enm-cs  to  the  benefit  of  the  other  parties  to  the  paper,  an 
inability  to  learn  the  proper  place  for  giving  such  notice 
which  excuses  the  holder,  is  not  available  to  another  in- 
dorser who  possesses  the  necessary  information. 

§  361.  It  is  very  well  settled  that  a  check  given  upon  a 
bank  payable  immediately,  is  in  time  if  presented  the  day 
subsequent  to  its  receipt,  and  if  protested  on  that  day,  and 
notice  given  the  day  following,  gives  to  the  holder  a  perfect 
remedy  against  the  indorser.  But  the  drawer  of  a  check 
occupies  a  very  different  position  from  the  drawer  of  a  bill 
of  exchange,  and  is  not  exonerated  from  liability  by  the 
want  of  notice  of  non-pa}Tnent,  unless  some  special  damage 
can  be  shown  to  have  resulted  therefrom.  If  the  notice  is 
given  successively  by  each  party  to  the  one  who  imme- 
diately precedes  him,  then  each  in  succession  is  entitled  to 
the  same  time  in  giving  his  notice,  as  was  the  holder  in 
giving  it  to  his  immediate  indorser.  But  the  holder,  if  he 
desires  to  look  to  all  the  preceding  parties  for  his  indemnity, 
should  give  notice  at  the  same  time  to  all  such  parties ;  and 
it  has  recently  been  held  that  to  entitle  himself  to  a  remedy 
against  a  remote  indorser,  he  must  give  the  notice  within 
the  same  time  required  of  him  in  order  to  hold  his  imme- 
diate indorser.    Hoioe  v.  Tijyper^  20  Eng.  L.  cfc  Eci-  220. 

§  362.  There  are  several  instances  in  which  prior  parties 
may  be  held  liable  to  the  holder  without  receiving  any  no- 
tice.    As : 

1.  "Where  an  indorser  unites  with  the  drawer  in  deceiving 
the  holder,  representing  that  a  bill  will  be  accepted  when 
he  knows  it  will  not ;  although  mere  knowledge  that  a  bill 
will  not  be  paid  at  maturity  will  not  have  that  effect. 

2.  "When  an  indorser  has  transferred  a  note  upon  which 
nothing  is  due  or  collectable. 


WHEN   NOTICE   RENDERED   UNNECESSARY.  171 

3.  No  notice  need  be  given  to  the  drawer  when  he  had 
no  funds  in  the  hands  of  the  drawee ;  or  any  right  to  expect 
his  acceptance  or  payment.  Bnt  this  does  not  excuse  the 
want  of  notice  to  the  indorser. 

4.  Where  the  indorser  has  taken  from  the  maker  an  as' 
signmcnt  of  all  his  property,  as  he  then  must  know  his  per- 
fect inability  to  pay  it.  Neither  is  it  necessary  if  he  takes 
an  assignment  of  property  amply  sufficient  to  pay  the  note, 
as  auy  notice  then  would  he  unnecessary.  But  unless  it  is 
shown  to  be  sufficient,  the  usual  notice  is  required.  Seacord 
V.  Miller,  3  Kern.  65.  This  doctrine  is  very  much  naiTOwed 
down  by  Ch.  Jus.  Gibson  in  Kramer  v.  Sandford,  4  'Watts 
&  Serg.  328.  So,  also,  is  it  entirely  competent  for  a  drawer 
or  indorser,  by  a  special  agreement,  to  waive  the  giving  of 
notice,  and  no  consideration  is  necessary  to  support  such  a 
waiver.  And  in  the  absence  of  such  notice  a  subsequent 
promise  to  pay,  made  by  the  jmrty  entitled  to  it,  with  full 
knowledge  of  the  fact  of  the  omission,  although  in  ignorance 
of  its  legal  effect,  will  be  sufficient  to  restore  his  liability. 
And  the  knowledge  of  such  fact,  it  seems,  may  be  infeiTcd 
from  the  promise,  in  connection  with  the  accompanying  cir- 
cumstances of  the  case,  without  requiring  affirmative  proof 
of  the  knowledge.    Lundie  v.  Boljertson,  7  East,  231. 

QUESTIONS. 

"What  creates  the  necessity  of  performing  the  duties  hero  contem^ 
plated  ?  What  the  difference  between  the  two  liabilities  ?  What  is  the 
object  of  giving  the  notice  ?  "When  are  the  services  of  a  Notary  Public 
first  required  ?  "When  are  they  then  only  necessary  ?  What  is  one  of 
the  distinctions  between  foreign  and  inland  bills  of  exchange  ?  What  is 
all  that  constitutes  tlio  strict  duty  of  the  Notary  Public  ?  Wimt  is  usual 
in  practice  ?  After  demanding  acceptance  or  payment,  and  refusal,  what 
does  the  holder  next  do?  What  does  tlio  Notary  Public  do?  What 
does  ho  do  on  tho  same  day  he  makes  the  presentation  and  demand  ? 
What  does  he  subsequently  do,  and  to  what  time  does  it  havo  relation  ? 
What  is  the  first  question  regarding  tho  term  protest  ?  What  tho  sec- 
ond? What  is  still  ono  other?  How  has  the  first  arisen?  What  is 
necessary  relating  to  presentment  to  drawee  ?    What  docs  the  waiver 


1Y2  QITESTIONS. 

of  protest  embraco?  IIow  is  notarial  certificate  evidenced?  What  does 
the  law-merchant  require  as  to  the  doing  of  business  by  the  Notary  ? 
Wliat  next  should  be  done  by  tlio  notary  after  presenting,  demanding, 
and  noting?  What  are  the  important  points  of  inquiry  regarding  the 
notice?  Who  decides  on  the  kind  of  notice,  whether  written,  or  ver 
bal?  What  does  the  law-merchant  consider  essential  in  the  notice? 
What  are  involved  in  the  term  dishonor  ?  What  is  deemed  sufficient  to 
support  the  notice  ?  What  is  usually  stated  in  it  ?  What  is  necessary 
as  to  ascertaining  the  bill  or  note  ?  How  far  may  inaccuracy  in  descrip- 
tion go  without  being  fatal?  How  may  it  sometimes  be  remedied? 
From  whom  must  the  notice  come  ?  How  is  it  when  given  by  a  stran- 
ger? May  it  be  given  by  a  party  not  at  the  time  the  holder,  and  when? 
To  whom  should  the  holder  give  notice  ?  To  whom,  if  satisfied  with  his 
immediate  indorser  ?  And  how  is  that  indorser  situated  on  receiving 
the  notice  ?  And  what  may  he  do  ?  What  is  the  rule  as  to  notice  given 
by  the  holder  ?  And  to  whom  is  it  available  ?  What  is  the  rule  where 
indorsed  by  a  firm  ?  What  where  two  indorse  jointly  ?  What,  in  case 
of  death  of  the  indorser?  What  when  indorser  has  a  general  agent? 
What  when  there  is  acceptor  Supra  Protest  ?  What  are  among  the  most 
important  things  relating  to  notice  ?  What  is  reasonable  notice  a  ques- 
tion of?  Where  parties  live  in  the  same  village  or  city,  how  is  notice 
to  be  served  ?  How  when  living  in  places  remote  from  each  other  ? 
When  may  notice  be  sent  or  mailed  in  each  case  ?  What  the  rule  as  to 
deposit  in  time  for  the  mail  of  the  next  day  ?  How  sent  where  there  is 
no  post  ?  How  as  to  necessity  of  sending  by  post  where  there  is  one  ? 
What  is  the  safer  way  where  there  is  a  postal  arrangement  ?  Where 
parties  live  in  the  same  city  or  village,  when  is  service  good  by  mail  ? 
Where  must  penny  post  go  to  render  such  service  good  ?  What  modes 
are  there  of  charging  drawer  and  indorser  with  notice  where  service 
may  be  made  by  mail  ?  What  may  be  shown  to  charge  indorser  where 
service  is  by  mail  ?  Suppose  the  post-office  fails  to  transfer  and  deliver  ? 
To  what  post-office  is  notice  to  be  directed  ?  How  if  two  post-offices,  at 
each  of  which  indorser  is  accustomed  to  receive  letters  ?  How  when  res- 
idence is  where  note  is  payable,  and  place  of  business  elsewhere  ?  How 
where  reverse  of  this  is  the  fact  ?  What  is  the  safe  mode  Avhere  residence 
is  in  the  country  ?  What  is  holder's  duty  when  he  is  ignorant  of  residence 
of  drawer  and  indorsers  ?  What  effect,  in  such  case,  has  delay  in  mak- 
ing inquiries  ?  What  is  his  plain  duty  ?  What  effect  of  sending  to  a 
wrong  place?  What  to  be  done  when  residence  becomes  known? 
When  is  a  check  payable  immediately  presented  in  time,  protested,  and 
notice  given  ?  How  is  drawer  of  a  check  situated  in  reference  to  no- 
tice ?    What  time  is  each  successive  party  entitled  to  in  giving  the 


PECULIAR   EIGHTS   OF  THE   HOLDER.  173 

notice  ?  "What  must  holder  do,  if  he  desires  to  hold  responsible  to  him 
all  the  parties  on  the  bill  or  note  ?  What  are  the  instances  in  Avhich 
prior  parties  may  be  held  I'able  in  the  absence  of  notice  ?  "What  first 
stated,  and  so  on  ?  What  rule  as  to  waiver  ?  What  rule  as  to  promise 
to  pay  ? 

PART  VII. 

EIGHTS  AXD   REMEDIES   OF   THE  HOLDEK. 

§  363.  The  neglect  of  the  holder  to  perforin  any  of  the 
duties  just  enumerated,  subjects  him  to  the  loss  of  all  reme- 
dies against  the  drawer  and  indorsers,  and  limits  him  to 
those  only  wh«se  liability  is  primary  and  absolute.  His 
faithful  performance  of  them  enables  him  to  look  to  any 
and  all  the  parties  on  the  bill  or  note  for  his  indemnity. 
And  he  can  take  his  own  time  anywhere  within  the  range 
of  the  statute  of  limitations  for  doing  it.  I  am  speaking, 
of  course,  of  the  right  irrespective  of  any  State  legislation ;  as 
some  States  have  passed  laws  exempting  the  indorser  from 
liability  unless  the  maker  is  first  prosecuted,  and  sometimes 
limiting  the  period  within  which  that  must  be  done  to  retain 
the  remedy  against  the  indorser.  It  is  also  competent  or- 
dinarily to  commence  at  the  same  time,  and  continue  the 
prosecution  to  judgment  and  execution  against  all  the  par- 
ties to  the  bill  or  note  ;  but  a  satisfaction  against  one  is  a 
satisfaction  against  all ;  and  in  many  or  most  of  the  States 
but  one  full  bill  of  costs  is  collectable  ;  and  in  all  the  other 
cases  arising  out  of  the  same  piece  of  negotiable  paper,  only 
the  necessary  disbursements. 

§  364.  The  holder  of  negotiable  paper,  as  we  Iiave  al- 
ready seen,  is,  under  certain  circumstances,  clothed  with  j^ccu- 
liar  rights.  Eeceiving  it  before  due,  in  good  faith,  and  for 
a  valuable  consideration,  he  is  only  affected  by  such  de- 
fences as  are  created  by  statute,  or  as  necessarily  vitiate  or 
destroy  his  title.  If  a  statute,  like  that  prohibiting  usury 
in  the  State  of  New  York,  renders  the  paper  void  in  whoso- 
ever hands  it  may  be,  such  hona  fide  holder  can  claim  no 
protection.     So,  also,  if  the  name  of  the  payee  as  first  in- 


174         WHEN    DEFENCES   TO   lilLh    OK   NOTE    INTEEPOSED. 

(lorscr  is  forged,  as  that  indorsement  is  the  only  avenue  of 
title,  tlic  holder  must  fail  to  make  out  any,  and  hence  can- 
not succeed.  The  defences  the  most  commonly  sought  to  be 
intei'poscd,  are: 

The  want  of  consideration,  total  or  partial. 

The  obtaining  the  bill  or  note  by  duress. 

Tlie  obtaining  the  same  through  fraud. 

Tlie  finding  it  when  lost  by  the  owner. 

The  receiving  it  to  be  applied  for  a  certain  purpose,  and 
applying  it  to  a  different  one.  « 

Tlic  obtaining  it  by  an  act  of  larceny.  ^ 
§  365.  In  regard  to  all  such  defences,  there  is  no  difficulty 
in  theu'  being  inteii^osed  as  between  the  original  parties  to 
the  bill  or  note.  The  payee,  when  holder  of  the  note  or  bill, 
has  no  other  or  different  rights  against  the  maker  or  acceptor, 
than  has  a  party  to  any  other  contract  against  another.  All 
defences  may  then  be  interposed  the  same  as  in  other  con- 
tracts. It  is  only  the  lona  fide  holder  receiving  the  same 
before  due  for  value  that  is  protected,  and  the  question 
occui'S  how  these  defences  can  be  made  available  when  the 
note  or  bill  is  in  the  hands  of  a  party  other  than  the  payee. 
As  already  seen,  such  party  is  presumptively  a  hona  fide, 
holder,  and  hence  entitled  to  protection.  But  this  is  a  mere 
presumption,  and  capable  of  being  rebutted.  In  all  such 
cases,  therefore,  such  holder,  showing  the  transfer,  through 
the  proof  of  the  handwriting  of  the  first  indorser,  is  jprima 
facie  entitled  to  recover.  This  shifts  the  burden  of  proof  to 
the  defendant.  He,  in  turn,  intei-poses  and  makes  proof  of 
one  of  the  defences  above  stated.  This  is  held  to  make  out 
a  prima  facie  defence  ;  such  a  defence  as  will  entitle  it  to 
jjrevail,  if  the  proofs  on  both  sides  stop  there.  The  effect 
of  all  this  is  again  to  shift  the  burden  of  proof  from  the 
defendant  to  the  plaintiff.  Enough  is  now  shown  on  the 
defence  to  do  away  with  the  presumption  under  which  the 
plamtiff  had  hitherto  sheltered  himself,  and  to  call  upon 
him  to  show  the  time  and  cii'cumstances  under  which  he 


WHEN  BANK  EESPONSIBLE   TO   HOLDER.  175 

received  the  note.  Failing  to  do  that,  be  is  beaten.  But 
if  he  then  shows  that  he  received  the  note  before  due,  in 
good  faitli,  and  for  value ;  in  other  words,  if  he  transfers  into 
fact  what  had  previously  rested  in  mere  presumption,  he  has 
entirely  disposed  of  the  defence,  and  entitled  himself  to  re- 
cover, Rogers  v.  Morton,  12  Wend.  484 ;  Munroe  v. 
Cooper,  5  Pick.  412. 

§  366.  Tlie  holder  may  acquire  a  right  to  bring  an  ac- 
tion against  the  prior  parties  to  a  bill  of  exchange,  to  enforce 
its  collection  before  the  time  has  elapsed  at  which  it  is  made 
payable.  Tliis  occurs  where  he  has  presented  it  to  the 
drawee  for  acceptance,  who  has  declined  to  accept,  and  the 
proper  notices  have  been  served  upon  drawer  and  indorsers. 
These,  by  drawing  and  indorsing,  have  impliedly  under- 
taken that  the  drawee,  on  j^reseutation  to  him  for  that 
purpose,  should  accept,  and  hence  his  declension  has  broken 
their  contract,  and  thus  rendered  them  immediately  liable. 
Tlic  holder,  tliercforc,  unless  there  be  an  acceptance  supra 
protest  which  he  chooses  to  receive,  is  at  liberty  to  pursue 
liis  remedy  immediately  against  such  drawer  and  indorsers. 

§  367.  A  question  has  arisen  of  great  practical  impor- 
tance, relating  to  the  right  of  the  holder  to  hold  a  bank 
responsible  for  the  amount  of  the  bill  or  note,  where  it  has 
been  left  there  for  collection,  and  through  failure  to  present 
for  acceptance  or  payment,  the  drawer  and  indorsers  have 
become  discharged.  Tlie  strongest  case  presented,  is  where 
the  bank,  receiving  it  for  that  puqDOse,  has  turned  it  over  to 
its  Notary  Public,  or  sent  it  to  a  bank  with  which  it  is  in 
correspondence  at  the  place  where  the  paper  is  made  pay- 
able, and  by  some  means  there  has  been  such  failure  as  to 
destroy  all  remedy  against  drawer  and  indorsers.  Li  the 
State  of  Xew  York,  it  is  clearly  settled  by  several  decisions 
in  the  highest  courts,  that  the  bank  so  receiving  it,  is  liable 
to  the  holder.  Allen  v.  The  Merchants  Bank,  22  Wend. 
215  ;  Walker  v.  The  Bank  of  the  State  of  ^lo  York,  5 
Seld.  582.     Commercial  Bank  of  Pennsylvania  v.   The 


170  EEMEDT  ON  LOST  BILL  OR  NOTE. 

Union  Banh  of  New  YorTc^  3  Kei^n.  203.  Tlie  contrary 
doctrine  seems  to  have  been  held  in  the  Suj)reme  Court  of 
Errors  in  Connecticut  in  East  Uaddam  Bank  v.  Scovill^  12 
Conn.  303. 

§  368.  A  person  who  pays  a  bill  supra  jyrotcst,  for  the 
honor  of  an  indorser,  is  placed  legally  in  the  same  posi- 
tion as  if  he  had  taken  from  such  indorser  a  transfer  of  the 
same,  and  has,  therefore,  a  right  to  take  advantage  of  any 
notice  of  which  the  person  for  whom  he  made  the  payment 
could  have  availed  himself.  Goodall  v.  Polhill  1  C.  B. 
233. 

§  369.  The  inquiry  may  properly  arise  as  to  the  rights 
and  remedies  of  the  holder  of  a  lost  bill  or  note.  If  such 
holder  be  the  payee  and  holds  it  unindorsed,  his  loss  may 
not  subject  him  to  much  inconvenience,  as  no  finder  or 
transferee  can,  in  such  case,  get  a  title  to  the  paper.  He 
ought,  however,  immediately  to  give  notice  to  the  maker  or 
acceptor  and  drawer.  K  he  be  an  indorsee,  the  payee  hav- 
ing indorsed  it  in  blank,  and  it  has  not  yet  fallen  due,  he 
should  not  only  give  notice  to  all  the  parties  upon  it,  and 
to  the  bank,  if  any,  where  it  is  payable ;  but  should  also 
advertise  in  the  public  newspapers,  and  by  every  acces- 
sible means  give  the  notice  as  extensively  as  possible.  In 
such  case  it  may  be  submitted  to  the  jury  as  a  question  of 
fact  whether  such  holder  had  used  due  diligence  in  apprising 
the  public  of  the  loss,  and  also  whether  the  purchaser  of 
the  paper  had,  under  the  circumstances  of  the  case,  exercised 
a  reasonable  discretion,  and  acted  with  good  faith  and  suffi- 
cient caution,  in  the  receipt  of  the  bill  or  note.  Subject  to 
the  possibility  of  rendering  the  above  question  sufficiently 
clear  to  a  jury  in  both  its  branches  or  aspects,  the  English 
rule  is,  that  if  a  negotiable  bill  or  note  be  lost  at  the  time  a 
party  is  called  on  to  pay,  the  loss  constitutes  a  good  defence. 
In  this  country,  in  some  States,  a  statute  provides  for  an 
indemnity  to  the  party  called  on  to  pay ;  and  upon  its  being 
given,  allows  a  recovery  against  him.       In  other  States, 


DErnanoN  of  guakaxty  akd  sueettship.         177 

the  courts,  without  a  statute,  require  the  indemnity.  In 
others,  the  English  rule  prevails.  Where,  without  a  statute, 
the  indemnity  is  required,  it  is  properly  a  matter  of  Chan- 
cery jurisdiction. 

QUESTIONS. 

TVhat  does  neglect  of  the  holder  to  perform  duties  enumerated  sub- 
ject him  to  ?  What  does  his  performance  of  them  enable  him  to  do  ? 
Within  what  time  ?  How  many  may  holder  proceed  against  at  same 
time?  What  effect  has  a  satisfaction  against  one?  What  peculiar 
rights  may  a  holder  of  negotiable  paper  have,  and  under  what  circum- 
stances ?  What  two  species  of  defence  may  still  be  interposed  ?  What 
are  the  defences  the  most  commonly  sought  to  be  interposed  ?  When 
may  any  one,  or  all  these,  be  interposed  ?  Who  is  the  party  protected 
against  them  ?  How  can  these  defences  be  made  available  ?  What  is 
the  legal  presumption  ?  What  must  the  bolder  show  to  make  out  liig 
case  ?  On  whom  then  is  the  burden  of  proof?  What  may  the  defend- 
ant show  to  make  out  a  prima  facie  defence?  What  is  the  holder  then 
called  upon  to  show,  and  what  may  he  show  to  entitle  himself  to  recov- 
er ?  Can  a  holder  acquire  a  right  to  bring  action  against  parties  to  the 
bUl  before  it  becomes  due  ?  How  may  he  acquire  such  right  ?  Under 
what  circumstances  may  the  holder  hold  a  bank  responsible  where  there 
has  been  a  neglect  in  charging  drawer  and  indorsers  ?  To  what  is  a  per- 
son who  pays  supra  protest  entitled  ?  What  must  the  holder  of  a  lost 
note  do?  What  question  of  fact  may  be  submitted  to  the  jury?  Sub- 
ject to  this,  what  is  the  English  rule  as  to  recovery  on  a  lost  not«f 
What  is  the  rule  in  the  different  American  States  ? 


CHAPTER  III. 

GUARANTY   AND   SURETYSHIP. 

PART  I. 
NATTTEE,   FOBM,   AXD  ESSENTIALS   OF  THE  CONTRACT. 

§  '370.  A  guaranty  is  a  promise  to  answer  for  the  pay- 
ment of  some  debt,  or  the  performance  of  some  duty,  in 
case  of  the  failure  of  another  person,  who  is  himself,  in  the 
first  instance,  liable  to  such  payment  or  performance. 
12 


178  ESSENTIALS   OF   GUAUAJ^TY   AND   SUKETTSHIP. 

Albany,  May  1,  18G0. 
In  consideration  tliat  A  B  furnishes  to  C  D,  goods  at  six 
months  credit  to  an  amount  not  exceeding  one  thousand  dol- 
lars, I  guarantee  the  payment  thereof. 

Sam  Slice. 

Or— 

Albant,  May  1, 1860. 

In  consideration  that  A  13  gives  to  C  D,  an  additional 

credit  of  six  months  on  his  debt  of  one  thousand  dollars  now 

due,  I  guarantee  the  payment  thereof. 

Sam  Slick. 

From  the  nature  of  guaranty  as  thus  defined,  and  the 
examples  given,  it  will  be  easy  to  gather  up  the  essentials 
that  enter  into  this  species  of  contract. 

§  371.  The  first  of  these  is  the  consideration  upon  which 
it  must  rest.  The  similarity  between  this  species  of  contract 
and  that  embodied  in  the  indorsement  of  negotiable  paper, 
early  led  to  a  doubt,  and  even  a  denial,  that  its  validity  at 
all  depended,  upon  any  consideration  appearing  upon  its 
face.  Pillans  v,  Yan  3fierop,  3  Burr.  1663.  But  the 
point  afterwards  came  up  before  the  House  of  Lords  in 
Rami  V.  Hughes,  in  which  it  was  held  that  a  consideration 
was  indispensable.  7  Broion  P.  C.  27  ;  Also  7  T.  B.  350. 
Note  a.  The  analysis  of  the  consideration  is  the  same  here 
as  in  the  case  of  ordinary  contracts,  with  the  marked  excep- 
tion, tliat  the  advantage  or  benefit,  instead  of  accruing,  as  in 
other  cases,  to  the  party  promising,  must  accrue  to  the  party 
on  whose  behalf  the  promise  is  made.  Tlie  party  who 
guarantees,  need  not  derive  any  benefit  from  the  contract. 
No  past  or  executed  consideration  is  sufficient  to  support 
the  guarantee's  undertaking,  unless  the  act  or  service  was 
done  at  the  request  of  the  party  promising. 

§  372.  The  second  essential  is,  that  there  must  be  a 
'principal  debtor.  The  imdcrtaking  of  the  guarantee  or 
surety  is  accessonal,  and  must,  therefore,  relate  to  the  same 


REQUISITES   TO   CONSTITUTE   GUAEAIS^TY.  179 

subject  as  the  principal  obligation.  It  must  not  be  larger, 
or  more  onerous,  than  that  obligation  ;  although,  it  may 
offer  a  more  prompt  and  efficient  remedy.  It  may  pledge  a 
judgment  or  mortgage,  while  the  principal  debtor  encoun- 
ters only  a  personal  liability.  Tlic  undertaking  of  the 
surety,  although  in  form  accessorial,  may,  under  certain  cir- 
cumstances, assume  the  character  of  a  principal  debtor. 
This  occurs  -where  he  guarantees,  knowing  that  the  contract 
of  the  principal  debtor  is  void  on  account  of  his  incapacity, 
as  in  case  of  minority  or  insanity.  lie  then  incurs  a  pri- 
mary liability. 

§  373.  The  third  requisite  is  the  consent  of  the  lyartij  to 
whom  the  promise  is  given.  The  elements  of  the  contract, 
so  far  as  the  surety  is  concerned,  are  not  complete  without 
the  obtaining  of  that  consent.  A  very  important  conse- 
quence follows  from  this,  viz.  :  that  a  simple  proposal  or 
offer  to  guarantee,  amounts  to  no  contract  that  is  legally 
binding  until  the  party  to  whom  it  is  made  has  signified  his 
acceptance.    Thus  a  party  writes  : 

"  GENTLEvrEX, — Mr.  France  informs  me  that  you  are 
about  publishing  an  arithmetic  for  him  and  another  person, 
and  I  ha/D6  no  objection  to  being  answerable  as  far  as  £50." 

Held  only  a  lyvoposal^  and  that  the  party  to  whom  it 
was  made,  if  he  intended  to  accej)t,  should  have  communi- 
cated such  intention  to  the  party  making  it.  Modey  v. 
Finclder^  Crompt.  Mees.  c6  Bos.  692.  The  guarantor  has 
clearly  a  right  to  know  whether  he  is  acting  in  that  capacity 
or  not,  and  the  Sujireme  Court  of  the  United  States  have 
more  than  once  decided  that  when  a  guaranty  is  jn-ospcctive, 
and  to  attach  to  future  transactions,  tlic  guarantor  is  entitled 
to  notice  that  it  has  been  accepted  and  acted  upon.  Lee  v. 
Did',  10  Peters,  482.  Adams  v.  Jones,  12  Peters,  207. 
But  where  an  absolute  guaranty  is  given  at  once,  as  in  the 
two  forms  given  in  §  370,  no  notice  of  acceptance  is  neces- 


180  WAEEANTY,   OUAKANTY,   AND  SUEETySIUP. 

sary  ;  but  tlio  party  to  wliom  it  is  given  may  act  on  it  -with- 
out further  commumcatiou.  Oxley  v.  Youiig^  2  U.  Black. 
613. 

QUESTIONS. 

What  is  a  guaranty  ?  What  the  form  of  one  ?  What  is  the  first  es- 
sential ?  Wherein  does  its  analysis  snow  a  difference  between  this  and 
other  contracts  ?  What  is  the  second  essential  ?  What  is  the  under- 
taking of  the  surety  ?  To  what  must  it  relate  ?  In  what  respect  may  it 
differ  from  the  principal  obligation?  What  is  the  third  requisite? 
What  consequence  foUows  the  necessity  of  obtaining  consent  ?  What 
illustration  ?  What  has  the  guarantor  a  right  to  know  ?  What  is  the 
guarantor  entitled  to,  when  the  guaranty  is  prospective  ?  How  when  it 
is  an  absolute  guaranty  ? 

PAKT    II. 

DIFFERKyT  KIXDS  OF   GITAEANTT,  AXD  MANXEB  IN  WHICn  TT  13  AFFECTED 
BY  THE  STATUTE  OF  FEAroS. 

§  374.  The  terms  warranty,  guaranty,  and  suretyship,  do 
not  differ  much  in  their  essential  principle,  although  they 
may,  in  the  subject-matter  to  which  they  are  applied.  Tliose 
of  warranty  and  guaranty  have  the  same  original  derivation, 
and  in  the  old  law  books  were  used  as  convertible  terms. 
The  former  has  come,  by  use,  to  have  two  applications,  the 
one  relating  to  title  both  to  real  and  personal  property,  and 
the  other  to  insurance,  being  certain  stipulations  or  agree- 
ments on  the  part  of  the  insured,  which  constitute  the  in- 
ducements to  the  insurer  to  enter  into  the  contract.  The 
suretyship  and  the  guaranty  cannot  essentially  differ,  the 
former  being  defined  as  an  accessory  agreement,  by  which 
a  person  binds  himself  for  another  already  bound,  and 
promises  to  the  creditor  to  satisfy  the  obligation,  if  the 
debtor  does  not.  A  distinction  has  been  attempted  to  be 
drawn  by  considering  that  the  surety  assumes  to  pay  for 
another,  and  makes  himself  directly  and  imconditionally, 
although  jointly,  answerable  for  the  debt ;  while  the  guaran- 
tor merely  imdertakes  to  pay  if  the  principal  does  not,  thus 


CLASSIFICATION  OF  COLLATERAL  C0NTEACT8.  181 

leaving  the  contract  of  suretysliip  unaflected  by  the  statute 
of  frauds,  while  that  of  guaranty  is  subject  to  it.  But  this 
does  not  seem  to  be  generally  adopted.  The  doetrin.e  of 
suretyship  is  derived,  in  many  respects,  from  the  civil  law, 
while  that  of  guaranty,  from  its  frequently  dealing  with 
negotiable  paper,  and  other  common  contracts  relating  to 
business,  is  more  mercantile  in  its  origin  and  character. 

§  375.  Tliere  is  no  doubt  of  the  general  principle  that 
that  provision  of  the  statute  of  frauds  requiring  any  promise 
to  answer  for  the  debt,  default,  or  miscarriage  of  another 
person  to  be  in  writing,  expressing  the  consideration,  and 
signed  by  the  party  to  be  charged,  applies  with  full  force  to 
the  contract  of  guaranty  or  suretyship.  That  is  in  every 
possible  sense  a  collateral  engagement  for  another.  Tliere  is, 
nevertheless,  great  conflict  in  the  cases  relating  to  its  appli- 
cation. In  the  case  of  Leonard  v.  Vredejiburgh,  8  John. 
29,  Chancellor  Kent,  then  Chief  Justice,  classifies  the  cases 
in  reference  to  the  application  of  the  statute.  lie  divides 
them  into  three  classes  :  ^ 

1.  Cases  in  which  the  guaranty  or  promise  is  collateral 
to  the  principal  contract,  but  is  made  at  the  same  time,  and 
becomes  an  essential  ground  of  the  credit  given  to  the  prin- 
cipal or  direct  debtor.  Here  he  remarks,  Tliere  is  not,  nor 
need  be,  any  other  consideration  than  that,  moving  between 
the  creditor  and  original  debtor. 

2.  Cases  in  which  the  collateral  undertaking  is  subse- 
quent to  the  creation  of  the  debt,  and  was  not  the  induce- 
ment to  it,  though  the  subsisting  liability  is  the  ground  of 
the  promise,  without  any  distinct  and  unconnected  induce- 
ment. Here  must  be  some  further  consideration  shown, 
having  an  immediate  respect  to  such  liability,  for  the  con- 
sideration for  the  original  debt  will  not  attach  to  this  subse- 
quent promise. 

3.  A  third  class  of  cases  is  when  the  promise  to  pay  the 
debt  of  another  arises  out  of  some  new  and  original  consid- 


182  GUAKAI^TY   UNDER  STATUTE  OF  FEAUD8. 

oration  of  benefit  or  barm  moving  between  the  newly 
contracting  parties. 

Tbc  two  first  classes  of  cases  arc  included  witbin  the 
statute  of  frauds,  wbile  tbe  tbird  is  not. 

No  fault  lias  l)ecn  found  witb  tbis  classification,  only 
witb  tbe  decision  of  tbe  court  in  tbc  case  in  wbicb  it  is  made. 
Tbere  a  note  in  tbe  ordinary  fonn  was  made,  and  below  tbe 
defendant  wrote,  "  I  guarantee  tbe  above,"  and  signed  it. 
Tbe  court  bold  tbc  guaranty  sufficient  witbin  tbe  statute, 
and  tbe  defendant  liable.  Tlie  question  wbetber  a  simple 
guaranty,  as  "  I  guarantee  tbe  witbin  or  above,"  or  "  I 
guarantee  tbe  payment  of  tbe  witbin  or  above,"  witbout 
any  statement  of  consideration,  altbougb  made  at  tbe  same 
time,  and,  in  fact,  a  part  of  tbe  same  transaction,  as  tbe  note 
or  instrument  wbicb  it  guarantees,  is  sufficient  to  enable  a 
recovery  under  tbe  statute  of  frauds,  is  an  exceedingly 
vexed  one  in  our  jurisprudence.  Tbis  sufficiently  appears 
from  tbe  fact  tbat  tbe  cases  of  Manroio  v.  Durham^  and 
Hall  V.  Farmer,  tbe  first  reported  first  in  3  Hill,  684,  bold- 
ing  it  not  within  the  statute,  and  afterwards  on  appeal  re- 
ported in  2  Comst.  533,  tbe  judges  of  tbe  Com*t  of  Appeals 
being  equally  divided,  and  bence  tbe  decision  of  tbe  Su- 
preme Com't  remaining  ;  tbe  last  re^^orted  first  in  5  Henio, 
484,  tbe  Supreme  Court  bolding  imder  substantially  tbe  same 
state  of  facts  tbat  tbe  case  was  within  the  statute,  tben  again 
on  appeal  in  2  Comst.  553,  in  wbicb  tbe  judges  of  tbe  Court 
of  Appeals,  being  again  equally  di\'ided,  tbe  judgment  of 
tbe  Supreme  Court  stood,  pro  forma,  affirmed.  Tbe  point 
came  again  up  before  tbe  Court  of  Appeals  in  tbe  case  of 
Brewster  v.  Silence,  4  Selden,  207,  in  wbicb  tbe  court,  witb 
but  one  dissenting  voice,  affirmed  tbe  judgment  of  tbe  Su- 
preme Court,  reported  m  11  Barh.  144,  bolding  it  to  be  a 
case  within  the  statute,  and  bence  tbat  tbe  consideration 
not  being  expressed,  tbe  plaintiff  could  not  recover.  Tbe 
court  regarded  tbe  contract  of  guaranty  as  in  itself  distinct 
from  tbat  embodied  in  tbe  note  or  instrament  guaranteed, 


GUAEANTT   OF   KOTE   PAYABLE   TO   BEAEER.  183 

and  hence  must  contain,  in  and  of  itself,  sufficient  to  render 
it  a  valid  contract.  Thus  we  may  hope  this  vexed  point  is 
finally  settled  in  the  jurisprudence  of  this  State,  and,  per- 
haps, country. 

§  376.  Another  vexed  question  has  arisen  out  of  the 
following  facts.  A  owes  to  B  $100.  B  presses  for  pay- 
ment.    A  offers  C  as  surety,. who  is  accepted. 

A  gives  to  B,  payable  to  him,  or  order,  and  not  to  C,  a 
note  in  the  following  form,  "  Six  months  after  date,  I  prom- 
ise to  pay  to  the  order  of  B,  $100,  value  received — signed 
A.  This,  before  delivery,  is  indorsed  by  C  in  blank.  "WTiat 
is  the  liability  of  C  ? 

In  Vermont  he  is  liable  as  joint  maker.  Sylvester  v. 
Downer,  20  Yt.  355. 

In  Louisiana  as  surety.  McGuire  v.  Bosworth,  1  La. 
248. 

In  Ohio  as  guarantor.    Robinson  v.  Aljell,  17  Ohio,  36. 

In  Missouri,  Massachusetts,  Maine,  Xcw  Hampshire, 
South  Carolina,  Michigan,  Indiana,  and  Texas,  he  would  be 
2i.  joint  promissor.  In  Alabama  2i  surety.  In  the  State  of 
!New  York,  he  ranks  now  clearly  as  an  indorser,  and  hence 
is  discharged  by  any  such  laches  on  the  part  of  the  holder 
as  discharges  the  indorser.  Hall  v.  Newcorab,  7  Hill,  416  ; 
Sjpies  V.  Gilmore,   1  Comst.  321. 

§  377.  The  next  question  tliat  arises  relates  to  tlie  rights 
and  liabilities  of  a  party  who  lias,  in  legal  form,  guaranteed 
the  payment  of  a  promissory  note  which  was  made  payable 
to  bearer.  "Would  a  neglect  to  present,  demand  payment, 
and  give  notice,  such  as  would  discharge  the  indorser,  effect 
the  discharge  of  such  a  party  ?  Although  there  is  some ' 
conflict  in  tlie  autliorities,  yet  the  better  opinion  seems  to 
be,  that  the  guarantor,  in  sucli  a  case,  is  to  be  treated,  not 
as  an  indorser,  who  makes  a  conditional  contract,  but  as  a 
guarantor,  who  makes  an  absolute  agreement  that  the  note 
shall  be  paid  at  maturity  ;  that  his  contract  is,  therefore, 
broken,  when  there  is  a  neglect  to  pay ;  and  that  it  is  no 


184  A   OUAKAKTY   18   NEGOTIABLE. 

part  of  tlie  holder's  agreement  to  give  notice  of  non-pay- 
ment. Brown  v.  Curtis^  2  Comst.  225.  A  different  doc- 
trine, liowever,  prevails  in  the  States  of  Massachusetts, 
Maine,  and  Pennsylvania,  in  which  the  contract  of  the 
guarantor  is  regarded  as  conditional,  and  if  the  maker 
of  the  note,  or  principal  debtor,  is  solvent  when  the  debt 
falls  due,  the  guarantor  is  entitled  to  reasonable  notice  of 
non-payment.  Oxford  Bank  v.  Uaynes^  8  Pick.  423.  Can- 
non  V.  Gihhs^  9  Serg.  &  JRawle^  202.  It  is  conceded,  how- 
ever, that  where  the  guaranty  is  that  the  note  is  collectahle, 
proceedings  to  collect  must  be  instituted  against  both  maker 
and  indorser  before  recourse  can  be  had  to  the  guarantor. 
Loveland  v.  Sliejpard^  2  Ilill^  139.  And  although  in  an 
ordinary  guaranty,  the  guarantor,  if  he  desires  notice,  should 
stipulate  for  it  in  his  contract ;  yet  in  view  of  the  conflict  of 
authorities,  the  safer  way,  in  all  cases,  is  to  give  it ;  more 
especially  as  some  of  the  cases  lean  strongly  to  its  necessity, 
where  the  guarantor  can  show  that  he  has  sustained  special 
damages  from  its  neglect. 

§  378.  Another  question  that  has  arisen  out  of  the  fact 
of  guaranty,  more  especially  in  its  connection  with  negotia- 
ble paper,  relates  to  its  negotiability.  Is  a  guaranty  nego- 
tiable either  in  connection  with  the  note  it  guai'antees  or 
separately  ?  The  diJQiculty  experienced  is  to  determine 
whether  it  is  to  be  regarded  as  merely  a  special  contract 
between  guarantor  and  guarantee,  or  whether  it  is  transfer- 
able by  the  latter,  and  equally  available  to  his  transferee. 
It  seems  pretty  clearly  settled  that  where  the  guaranty  is  on 
negotiable  paper,  and  is,  by  its  terms,  limited  to  no  particu- 
lar person  but  to  the  payee  or  his  order,  or  to  bearer,  it  is  a 
complete  guaranty  to  every  successive  person  who  shall  be- 
come the  holder  of  the  paper.  Sto'ry  on  Bills,  §  458.  Mc- 
Laren V.  Watson's  executors,  26  Wend.  425.  The  point  the 
most  controverted  is  whether  this  is  not  equally  true  when 
the  guaranty  is  on  a  separate  instrument.  In  the  latter  case, 
the  prevailing  opinion  is,  that  it  is  then  to  be  regarded  as  a 


CONSTErCTION   OF  GUARANTY.  185 

special  contract,  and  hence,  at  common  law,  enforceable 
only  by  the  party  to  it,  or  by  bis  assignee,  in  his  name,  and 
subject  to  the  equities  existing  against  him. 

§  379.  The  guaranty  is  to  be  strictly  construed.  The 
case,  to  warrant  a  recovery,  must  be  brought  within  the  ex- 
press terms  of  the  instrument,  and  the  liability  of  the  surety 
is  never  to  be  extended  by  implication.  "When  it  is  specialj 
and  addressed  to  a  particular  individual,  he  alone  has  the 
right  to  act  upon  and  acquire  rights  under  it.  If,  however, 
the  guaranty  is  general,  as  a  general  letter  of  credit,  then 
any  one,  by  complying  with  its  terms,  becomes  a  party  to 
the  same,  as  if  it  had  been  special  to  him.  Tliere  must  be 
no  departure  whatever  from  the  strict  terms  of  the  contract, 
and  if  the  guarantor  agreed  to  pay  drafts  at  sixty  days'  sight, 
he  is  not  bound  by  drafts  at  ninety  days'  sight.  Birckhead 
V.  Brown,  5  Ilill,  G34.  So  also  if  payment  by  a  vendee  be 
guaranteed  on  condition  that  the  vendee  will  give  credit 
until  a  specified  time,  the  guarantor  will  not  be  liable  if  a 
shorter  credit  be  given,  although  the  vendee  did  not  require 
payment  until  the  specified  time.  Walrath  v.  Thomsoji,  2 
Comst.  185.  "Where  A  was  a  clerk  in  a  bank,  and  it  was 
guaranteed  that  he  should  "  well  and  faithfully  perform 
the  duties  assigned  to  and  the  trusts  reposed  in  him,"  it  was 
held  to  apply  only  to  his  honesty  and  not  ability  ;  and  that 
a  loss  through  the  latter  was  not  covered  by  it.  Union 
BanJc  V.  Clossey,  10  John.  271. 

§  380.  Another  question  of  great  doubt  and  difiiculty 
has  occurred  in  determining  what  shall,  and  what  shall  not, 
be  held  as  a  continuing  or  standing  guaranty.  For  instance, 
the  following  guaranty  is  made :  "  I  guarantee  the  pay- 
ment of  all  such  sums,  not  exceeding  £3,000,  which  shall, 
at  any  time  hereafter,  be  advanced  by  the  plaintifi"  to  A." 
The  point  to  determine  is,  whether  this  is  a  continuing  or 
standing  guaranty  to  that  amount,  and  thus  that,  liowever 
numerous  the  charges  and  credits  may  be,  the  guarantor 
may  be  held  ultimately  for  any  balance,  at  any  futm-e  time, 


18G  CONTINUINO,   OK  STANDING   GUAJlANTT. 

lip  to  thfit  iinioiiiit ;  or  whether  it  must  be  taken  simply  as 
a  guaranty  for  advances  once  made  to  tlie  extent  of  £3,000. 
It  will  be  seen  that  this  is  a  question  of  vast  importance  to 
the  mercantile  world  ;  one  that  may  vary  with  every  case 
presented  ;  and  one,  too,  of  very  difficult  settlement.  Tliere 
is  no  other  mode  of  settling  the  question,  than  of  resolving  it, 
in  each  case,  into  a  quesiton  of  mtent  of  the  parties,  to  be 
arrived  at  through  the  language  they  have  embodied  in  the 
instrument.  In  the  case  supposed,  it  was  held  not  to  be  a 
continuing  guaranty.  Kirby  v.  DiiJce  of  Marlborough^  2 
M.  &  8.  18.  A  few  other  illustrations  will,  perhaps,  more 
familiarize  these  species  of  guaranty  to  the  minds  of  busi- 
ness men. 

The  guaranty  is  "  For  any  goods  he  hath  or  may  supply 
"W.  P.  with,  to  the  amount  of  £100."  Held,  a  continuing  or 
standing  guaranty  to  that  extent.  Mason  v.  Pilchard^  12 
East.  227. 

"  We  consider  Mr.  J.  V.  E.  good  for  all  he  may  want  of 
you,  and  we  will  indemnify  the  same."  Held,  not  a  continu- 
ing guaranty.      Whitney  v.  Groot^  24  Wend.  82. 

"  I  hereby  agree  to  guarantee  to  you  the  payment  of 
such  an  amount  of  goods,  at  a  credit  of  one  year,  interest 
after  six  months,  not  exceeding  $500,  as  you  may  credit  to 
J.  H.  P."  Held,  not  a  continuing  guaranty,  but  exhausted 
by  a  single  purchase  to  the  amount  mentioned.  Fellows  v. 
Prentiss,  3  Pen.  512. 

"  Sir,  I  will  be  responsible  for  what  stock  M.  E.  McKee 

■  has  had,  or  may  want  hereafter,  to  the  amount  of  $500." 

Held,  a  continuing  guaranty,  and  not  exhausted  by  purchases 

of    and  payments  for    stock    to  the  amount  mentioned. 

Gates  V.  McKee,  3  Kern.  232. 

"  I  consider  myself  bound  to  you  for  any  debt  he  may 
contract  for  his  business  as  a  jeweler,  not  exceeding  one 
hundred  pounds,  after  this  date."  Held,  a  continuing 
guaranty,  not  confined  to  one  instance,  but  applying  to 
debts  successively  renewed.    Mede  v.  Wells,  2  Campb.  -113. 


EXTESTGnSKMENT   OF   GUAKANTY.  1S7 

These  continuing  or  standing  guaranties,  consisting,  as 
they  do,  in  the  power  or  authority  given  to  another  to  con- 
tinue the  furnishing  of  goods  upon  the  credit  of  the  guaran- 
tor, may  at  any  time  be  revoked  as  to  any  future  liabilities, 
by  serving  the  proper  notice  upon  the  party  guaranteed. 
Tliis,  liowever,  cannot  affect  any  act  already  done  under  the 
guaranty. 

QUESTIONS. 

What  three  terms  come  under  the  same  principle  ?  "What  two  have 
the  same  derivation  ?  "What  applications  has  the  term  warranty  ?  "What 
is  the  definition  of  suretyship  ?  "What  distinction  has  been  attempted  to 
be  drawn  between  suretyship  and  guaranty  ?  "What  provision  of  tho 
statute  of  frauds  applies  to  guaranty  and  suretyship  ?  "What  is  the  clas- 
sification of  cases  arising  under  the  statute  ?  "What  is  understood  to  bo 
the  rule  finally  settled  as  to  the  liability  of  the  guarantor  of  negotiable 
paper  where  no  consideration  is  expressed  ?  "What  are  the  different  ha- 
bilities  of  an  indorscr  of  a  note  payable  to  the  order  of  another,  where 
such  indorscr  is  proposed  and  accepted  as  a  surety  ?  "What  are  the  rights 
and  liabilities  of  the  guarantor  of  a  note  payable  to  bearer  ?  Is  such  to 
bo  treated  as  an  indorscr,  and  as  such  entitled  to  notice  ?  "What  is  tho 
character  of  his  contract,  is  it  conditional  or  absolute  ?  "What  is  neces- 
sary where  a  note  is  guaranteed  to  be  collectable  ?  What  is  the  safer 
way  in  regard  to  notice  ?  And  why  ?  Is  a  guaranty  negotiable  in  con- 
nection with  the  note  on  which  it  is  written  ?  Is  it  so  when  on  a  sepa- 
rate instrument  ?  How  is  a  guaranty  to  be  construed  ?  How  must  a  case 
be  brought  to  warrant  a  recovery  ?  To  whom  is  a  guaranty  available 
when  addressed  to  an  individual  ?  To  whom  when  general  ?  "What  is 
the  rule  in  regard  to  departure  from  the  terms  of  the  contract  ?  "What 
illustrations?  What  is  the  difference  betAveen  a  guaranty  to  be  perfonned 
at  once,  and  a  continuing,  or  standing  guaranty  ?  What  is  it  that  con- 
trols in  tho  matter,  and  decides  in  each  case  ?  What  illustrations  ?  How 
may  continuing  or  standing  guaranties  be  revoked  ? 

PART    III. 
MODES   OF  EXTINOmsniKO  THE   CONTRACT   OF   GUARANTY   OR   STJRETTSnTP, 

§  381.  One  of  the  modes  by  which  the  liability  of  tho 
guarantor  may  be  terminated  is  by  the  expiration  of  the 
iiine  for  which  it  had  heen  assumed,  and  to  which  it  was 


188  EXTINOmSiniENT   OF   GUARANTY — COMPROMISE. 

limited.  And  if  without  limitation,  it  may  be  terminated 
ly  notice.  So,  also,  the  contract  may  he  cxtingnished  by 
the  aA)t8  of  the  parties  ;  as  if  the  undertaking  of  the  surety 
were  suhjcct  to  a  condition,  which  has  not  been  performed. 
It  may  be  extinguished  by  payincnt,  either  by  the  principal 
debtor  or  the  surety.  In  reference  to  this,  some  difficult 
questions  sometimes  arise  as  to  the  application  to  l)c  made  of 
payments  which  have  been  made  by  the  principal  to  a  cred- 
itor with  whom  he  has  transactions,  out  of  which  have  grown 
debts  independent  of  that  guaranteed  by  the  surety.  The 
general  principles  regulating  the  application  of  payments, 
have  already  been  briefly  considered,  and  the  only  question 
here  is,  whether  the  law  will  raise  so  strong  an  equity  in  favor 
of  the  surety,  as  to  compel  the  application  of  money  pay- 
ments in  his  favor  ;  or  whether  it  will  allow  the  debtor  and 
creditor,  imder  the  principles  already  mentioned,  to  make 
such  api^lication,  regardless  of  the  wishes  of  the  surety. 
This  is  a  matter  which  the  law  leaves  entirely  to  the  parties, 
and  the  surety  is  denied  all  rights  relating  to  such  applica- 
tion.    Collins  V.  Gwynne,  9  Bing.  644. 

§  382.  Another  method  of  extinguishment  is  by  com- 
promise, viz. :  the  receiving  a  less  amount  in  full  satisfac- 
tion. A  compromise  between  principal  and  creditor,  dis- 
charges the  surety,  unless  the  latter  has  previously,  by  part 
payment  and  giving  security  for  the  balance,  so  made  the 
debt  his  own  as  to  enable  the  creditor  to  hold  him  for  any 
balance  over  and  above  what  he  received  from  the  com- 
promise. It  is,  however,  entirely  competent  for  the  creditor, 
in  compromising,  to  reserve  all  rights  and  remedies  against 
the  sureties,  and  if  so,  although  the  principal  may  be  dis- 
charged, yet  the  sureties  are  still  liable ;  and  after  having 
been  compelled  to  satisfy  the  claims  of  the  creditor,  they 
may  then  look  for  their  indemnity  to  their  principal,  not- 
withstanding his  compromise  with  the  creditor.  The  law 
will  not  protect  him  if  he  has  failed  to  protect  them  in  his 
settlement.     The  effect  of  a  compromise  between  the  cred- 


EXTINGUISHMENT  OF  GUABANTY — BET.EASE — MEEGER.     189 

iter  and  the  surety  does  not  discliarge  the  principal,  although 
he  is  liable  only  for  what  the  creditor  has  failed  to  realize 
through  the  surety.  So  a  creditor  may  compromise  with 
one  of  the  sureties  without  impairing  any  right  he  may 
have  against  the  others,  except  that  he  can  recover  against 
them  only  the  proportion  they  would  have  paid,  supposing 
the  compromising  surety  had  contributed  his  full  share. 

§  383.  Another  mode  of  extinguishment  is  by  release. 
And  this  may,  in  some  cases,  be  a  matter  of  inference,  as 
where  the  creditor  restores  to  his  debtor  the  writing  which 
contains  the  obligation.  But  the  restitution  of  an  article 
pledged  for  a  debt,  will  raise  no  presumption  of  a  release 
of  the  debt  itself.  A  release  of  the  piincipal  discharges  the 
sureties,  but  a  release  of  the  sureties  will  have  no  such  effect 
upon  the  principal.  But  if  the  co-sureties  were  entitled  to 
have  recourse  against  the  one  discharged,  then  such  dis- 
charge has  the  effect  of  liberating  them  from  all  liability 
for  any  such  sum  as  they  could  have  had  recourse  against 
him,  had  he  not  been  discharged. 

§  384.  There  is  also  another  mode  of  extinguishment,  by 
merger,  which  occurs  where  the  creditor  acccj)ts  from  his 
debtor  a  higher  security  than  that  under  which  his  former 
debt  rested,  as  a  bond  for  a  simple  contract  debt.  This,  if 
not  received  as  collateral  security,  merges  and  extinguishes 
the  former  debt.  Tliis  is  limited  to  the  case  where  the 
original  debtor  himself  enters  into  the  higher  security.  So, 
also,  is  it  limited  to  the  acceptance  of  a  higher  security. 
The  receiving  one  of  equal  or  inferior  degree,  is  no  extin- 
guishment. 

§  385.  Another  mode  l)y  which  the  surety's  liability  may 
be  extuiguishcd,  is  by  tlie  creditor's  fjiviixg  time  to  the  priJi- 
cipal,  vjit/iout  the  surctijs  consent.  "Where  a  valid  agree- 
ment to  this  effect  is  made,  reposing  upon  a  sufficient  consid- 
eration, by  whicli,  for  the  time  specified,  no  remedy  can 
be  pursued  against  the  principal  debtor,  that,  of  itself, 
releases  the  surety.    The  reason  of  this  is,  that  it  deprives 


190  EXTLNGUISIliLENT   OF   BUKETY6UIP FKAUD. 

the  surety  of  a  right  wliich  he  would  otherwise  Lave,  of 
discharging  liimsell"  the  debt,  and  then  of  proceeding  imme- 
diately to  collect  it  of  the  principal.  This  will  indicate  the 
kind  of  contract  necessary  to  exist  between  the  principal 
and  the  creditor  to  work  such  a  discharge.  K  such  contract 
be  conditional,  depending  upon  the  performance  of  some 
act  by  the  principal  which  he  neglects  to  perform,  thus 
rendering  it  inoperative,  it  will  produce  no  such  result  upon 
the  surety.  The  creditor  may  perform  some  acts  analogous 
to  the  giving  of  time,  and  producing  the  same  effect ;  such, 
for  instance,  as  the  taking  out  an  execution  against  the  prin- 
cipal, acquiring  a  lien  upon  his  property,  and  then  with- 
drawing it.  The  surety,  in  any  of  these  cases,  will  not  be 
discharged  if  he  gives  his  consent,  knowing  all  the  facts,  or 
if  the  agi-eement,  by  its  terms,  expressly  reserves  the  right 
of  proceeding  against  the  surety ;  because  a  recovery  and 
satisfaction  against  him  would  entitle  him  to  proceed  imme- 
diately against  the  principal. 

§  386.  Another  mode  by  which  the  liability  of  the 
sm*ety  may  be  extinguished,  is  by  alteration  of  the  contract 
upon  which  he  is  surety,  by  any  addition,  abstraction,  or 
deviation,  without  his  consent.  Such  an  alteration  has  the 
effect  of  substituting  a  new  contract  in  the  place  of  the  old, 
and  thus  of  discharging  the  surety. 

§  387.  Another  mode  of  extinguishing  the  surety's 
contract,  or  rather  of  avoiding  originally  the  formation  of  a 
legal  contract,  is  the  practice  upon  him  of  such  fraud  and 
imposition,  as  operates  to  deceive  him.  To  have  this  effect, 
the  fraud  may  either  be  practised  by  the  creditor  in  relation 
to  the  obligation  of  the  surety,  or  by  the  principal  debtor, 
with  the  knowledge  or  assent  of  the  creditor.  So,  also,  if 
the  debtor's  original  obligation  can  be  avoided  by  fraud,  the 
surety  may  avail  himself  of  that  fact  in  defence.  The  doc- 
trine, as  laid  down  by  Chief  Justice  Tindall  in  Stone  v. 
Compton,  5  Bingh.  iT.  C.  142,  is  that  "  if,  with  the  knowl- 
edge or  assent  of  the  creditor,  any  material  part  of  the 


.EXTINGUISmiENT  OF  SUEETTSHIP — MISTAKE.  191 

transaction  between  the  creditor  and  liis  debtor  is  misrepre- 
sented to  the  surety,  the  misrepresentation  being  such,  that 
but  for  the  same  having  taken  phice,  either  the  suretyship 
would  not  have  been  entered  into  at  all,  or,  being  entered 
into,  the  extent  of  the  surety's  liability  might  be  thereby 
increased,  the  security  so  given  is  voidable  at  law  on  the 
ground  of  fraud."  The  facts  which  called  out  this  doctrine, 
and  to  which  it  was  applied,  were :  A  was  indebted  to  B  in 
the  sum  of  £500,  and  was  desirous  of  obtaining  a  further 
loan.  A  and  B  agree  together,  that  B  shall  advance  A 
£1,500,  and  that  B  shall  deduct  from  it  to  repay  himself,  the 
sum  of  £500.  C  is  surety  for  A,  and  is  ignorant  of  this 
agreement..  He  becomes  such  sm'ety,  believing  that  A  had 
the  full  benefit  of  the  whole  £1,500,  instead  of  the  £1,000. 
Held,  that  the  surety  was  not  liable,  that  his  agreement  to 
become  such  was  void  on  the  ground  of  fraud.  Another 
illustration  is  found  in  Middleton  v.  Lord  Onslow,  1  P. 
Williams,  768,  in  which  the  creditors  of  A  agree  to  accept 
a  composition  in  discharge  of  their  demands,  upon  having 
the  composition-money  secured  to  them  by  a  third  jiarty. 
One  of  the  creditors  privately  prevails  upon  A  to  give  him 
security  for  the  residue  of  his  debt.  Held,  that  such  secu- 
rity is  discliarged  from  his  liability,  on  the  ground  that  the 
agreement  is  a  fraud  upon  him,  as  it  deprives  the  debtor  of 
the  benefit  which  the  surety  intended  he  should  liave. 

§  388.  Another  thing  that  may  modify  or  destroy  tlic 
liability  of  ilie  surety,  is  raistake  /  and  this  may  regard 
either  the  irmicipal  motive  or  consideration  that  induced 
the  entering  into  the  contract ;  or  \}i\Q,  'person,  or  rather  char- 
acter sustained  by  the  party  to  it ;  or  the  subject-matter  of 
the  contract  itself.  Any  such  mutual  mistake  in  relation  to 
either  one  of  these  as  would  have  led  to  a  difibrent  result, 
had  the  facts  been  known,  will  be  clearly  sufiicient  to  extin- 
guish the  surety's  obligation. 

§  389.  Another  mode  of  extinguishing  the  surety's  obli- 
gation, is  by  what  is  technically  termed  confusion,  wliich 


192  INSTANCES   OF  CONFUSION  OF  RIGHTS. 

means  the  imion  in  tliosanic  person  of  tlic  rights  of  tlio  cred- 
itor and  the  obligations  of  the  surety  or  debtor,  in  respect  of 
the  same  debt.  The  original  debtor  or  surety  may,  for  in- 
stance, become  the  heir  of  the  creditor,  or  the  creditor  may 
become  the  heir  of  the  debtor  or  surety.  In  the  first  instance, 
as  heir,  he  succeeds  to  all  the  rights  of  the  deceased,  and  be- 
comes in  that  character  debtor  for  the  debt  of  which  he  is 
creditor  on  liis  own  account.  In  the  second,  the  creditor, 
becoming  the  heir  of  his  debtor,  becomes  in  that  quality  of 
heir,  the  creditor  of  that  same  debt  of  which  he  is  debtor 
on  his  own  account.  Tlius  the  rights  and  obligations  that 
belong  to  one  capacity,  by  the  transfer  over  to  another, 
become  so  utterly  confused,  that  a  total  extinguishment  is 
the  inevitable  consequence.  The  extinguishment  of  the 
principal  debt  by  confusion,  operates  as  an  extinguishment 
of  the  obligation  of  the  sureties.  But  the  extinction  of  the 
accessory  obligation  of  the  surety  from  the  same  cause,  does 
not  operate  as  an  extinction  of  the  principal  obligation. 

QUESTIONS. 

"What  is  the  first  mode  by  which  liability  of  the  guarantor  may  be 
terminated  ?  How  may  it  be  terminated  by  acts  of  the  parties  ?  How 
by  payment  ?  By  whom  ?  What  question  may  arise  in  relation  to 
application  of  payments?  How  is  it  answered?  "What  is  another 
mode  of  extinguishment  ?  "What  will  prevent  a  compromise  between 
creditor  and  principal  from  discharging  surety  ?  How  may  compromise 
be  made  without  that  effect?  "What  effect  of  compromise  between 
creditor  and  surety?  "What  effect  of  compromise  between  creditor 
and  one  of  the  sureties  ?  "What  is  another  mode  of  extinguishment  ? 
"When  may  release  be  a  matter  of  inference?  "What  effect  has  re- 
lease of  the  principal  ?  What,  release  of  the  sureties  ?  What,  if  co- 
sureties, entitled  to  have  recourse  against  the  one  discharged  ?  "What, 
another  mode  of  extinguishment  ?  When  does  it  occur  ?  What  illus- 
tration of  it  ?  What  are  the  limitations  ?  What  another  mode  of  ex- 
tinguishment ?  What  is  necessary  to  this  ?  What  is  the  reason  ?  What 
does  this  indicate  ?  Suppose  contract  conditional  and  condition  not  per- 
formed ?  "What  act  may  creditor  do  analogous  to  giving  time  ?  Suppose 
agreement  reserves  right  of  proceeding  against  the  surety,  what  effect 
then?    What  is  another  mode  of  extinguishment?    How  done,  and 


WHAT  NECESSAKT  FOE  LIABILITY  OF  SUKETY.  193 

with  "what  effect  ?  "What  another  mode  ?  How  may  fraud  1)0  practised 
to  have  this  effect?  Suppose  origiual  debtor's  obligation  may  be  avoided 
through  fraud,  what  effect  lias  that  upon  the  surety  ?  "What  illustra- 
tions? "What  another  mode  of  extinguishment?  Mistake  as  to  what? 
"What  is  the  test  of  sufficiency  of  mistake?  "What  another  mode  of 
extinguishment  ?  "What  is  the  meaning  of  Itie  term  confusion  ?  "What 
the  instances  in  which  it  may  occur  ?  "What  effect  has  the  extinguish- 
ment by  confusion  of  the  principal  debt  ?  "What  of  the  accessory  obli- 
gation ? 

PART  rv. 

EIGHTS  OF  THE  CEEDITOR  AGAINST  THE  SrEETT. 

§  390.  Tlic  first  tiling  neccssaiy  to  seeiu'c  tlie  liability  of 
tlie  surety,  is  the  default  of  \X\<i 'pvinci])al  debtor.  The  debt 
must  become  due,  and  remain  unpaid,  to  give  the  creditor 
tlie  right  of  resorting  to  the  surety.  It  must  have  been 
legal  in  its  inception.  Not  only  must  the  time  for  payment 
have  arrived,  but  if  any  act  remains  to  be  done  by  the 
creditor  to  the  debtor,  before  he  could  proceed  against  him, 
until  that  act  is  done,  he  has  no  right  against  the  surety. 
A  surety,  for  instance,  engages  that  his  principal  shall,  from 
time  to  time,  iohe7i  required  so  to  do  by  the  creditor^  cl^ly 
account  for  all  moneys  received  by  him,  and  pay  over  any 
balance  that  may  be  due  from  him.  The  creditor,  before  he 
has  any  claim  against  the  surety,  must  require,  and  take  the 
account.    Antrohus  v,  Davidson^  3  Iferivcde,  578. 

§  391.  The  creditor  is  not  only  entitled  to  all  the  se- 
curities which  have  been  given  to  him  by  the  principal  debtor, 
but  he  is  also  in  equity  further  entitled  to  the  benefit  of 
all  those  which  the  principal  debtor,  by  way  of  security,  has 
given  to  his  surety.  A  purchaser  of  land,  for  instance,  pro- 
cures a  third  person  to  give  his  note  for  the  consideration 
money  ;  and  to  indemnify  him  for  such  liability,  executes  to 
him  his  bond  and  mortgage  on  the  premises ;  and  before 
the  note  falls  due,  the  maker  of  it  fails.  Hold  that  the 
vendor  of  the  land  is  entitled  to  the  benefit  of  the  bond  and 
mortgage.  Ya'd  v.  Foster ,  4  Comst.  312. 
13 


194:  EIGHTS  GIVEN  BY  THE  EOMAN   CIVIL  LAW. 

§  392.  AVbcro  a  principal  debtor  assigns  Ms  effects  to 
trustees  for  the  benefit  of  bis  creditors  pro-'rata,  and  owes  a 
debt  for  a  part  of  which  a  surety  is  responsible,  and  for  a 
jiart  of  which  he  is  not,  the  rule  in  the  distribution  of 
dividends  is,  to  apply  them  ratably  to  the  whole  debt,  in- 
cludmg  as  well,  the  part  to  which  the  guaranty  does,  as 
that  to  which  it  does  not  extend.  Bardwell  v.  Lydall,  7 
Bingh.  489. 

QUESTIONS. 

"What  is  the  first  thing  necessary  to  secure  the  liability  of  the  sure- 
ty ?  What  must  be  the  character  of  the  debt  ?  What,  if  any  act  remains 
to  be  done  by  the  creditor  to  the  debtor,  before  he  could  proceed  against 
him  ?  "What  illustration  ?  What  is  the  creditor  in  equity  entitled  to 
as  to  securities  given  to  the  surety  ?  What  illustration  ?  Where  a 
principal  debtor  assigns  his  effects  to  trustees,  for  the  benefit  of  his 
creditors  pro-rata,  owing  a  debt,  for  a  part  of  which  a  surety  is  respon- 
sible, and  for  a  part  of  which  he  is  not,  what  is  the  rale  of  distribution 
of  dividends  realized  out  of  his  effects  ? 

PART  V. 

EIGHTS   OF   THE   ST'RETY   AGAINST   THE    CEEDITOE. 

§  393.  Tlie  Roman  civil  law,  in  most  respects  the  mother 
of  our  equity  jurisprudence,  and  of  the  Louisiana  Code,  gave 
to  the  surety,  as  against  the  creditor,  some  very  important 
rights,  which  the  English  common  law  has  never  conceded, 
and  in  relation  to  which  courts  of  equity  have  proceeded  with 
a  very  faltering  step.  One  of  these  rights  was  tei-med  that  of 
discussion,  and  this  related  both  to  person  and  property.  It 
gave  to  the  surety  the  right  when  the  debt  fell  due,  of  compel- 
ling the  creditor  first  to  seek  his  remedy  against  the  principal 
debtor  befoi'e  resorting  to  him,  and  if  any  property  had  been 
pledged  by  the  principal  for  the  debt,  of  further  compelling 
the  creditor  to  exhaust  his  remedy  against  that,  before  he 
could  be  made  liable.  The  common  law  fails  to  recognize 
either  one  of  these  rights.  It  allows  the  creditor  to  avail  him- 
self of  all  his  secm-ities  to  obtain  the  payment  of  his  de- 


EIGHTS   GIVEN  BY  EQUITY.  195 

mand.  He  may,  if  lie  chooses,  proceed  against  all  of  tliem 
at  the  same  time,  but  the  moment  he  obtains  satisfaction 
from  one,  that  satisfies  all,  and  he  has  no  further  claim 
upon  any. 

§  394.  The  Court  of  Chancery,  in  England  and  in  this 
country,  has  strongly  desired  to  concede  to  the  surety  this 
right  in  both  its  aspects,  and  although  it  can  hardly  be  said 
to  have  made  a  full  concession  of  it,  yet  in  several  respects 
it  has  apj^roached  very  nearly  to  it.  In  relation  to  the  first, 
or  discussion  of  the  person,  the  case  of  King  v.  Baldwin^ 
17  John^  384,  and  two  cases  in  Pennsylvania,  one  in  8  Serg. 
(&  BaioJe,  116,  and  the  other  15  Serg.  &  Rawle,  29,  30,  go, 
perhaps,  the  furthest  in  settling  the  principle,  and  pretty 
plainly  sustain  the  right  of  the  surety,  when  the  debt  falls 
due,  to  compel  the  creditor  to  proceed  against  the  principal 
to  collect  it,  or  if  he  declines,  and  the  principal  becomes  in- 
solvent, then  to  be  exonerated  from  all  liability. 

As  to  the  second,  or  discussion  of  the  property,  it  seems 
conceded  that  where  a  creditor  has  a  personal  remedy  against 
the  surety,  and  also  a  fund  to  which  he  may  resort  for  pay- 
ment, but  1;o  which  the  surety  cannot,  equity  will,  upon  the 
surety's  indemnifying  the  creditor  against  the  consequences 
of  all  risk,  delay,  and  expense,  compel  the  creditor  first  to 
apply  the  fund  towards  the  satisfaction  of  his  debt,  before 
proceeding  personally  against  the  surety.  Wright  v.  Simso?!, 
6  Vesey,  714  ;  Wright  v.  Mitf,  1  //.  jBlacl',  136  JVote.  So, 
also,  if  property  belonging  to  the  principal  and  property  be- 
longing to  the  surety  be  deposited  with  the' creditor,  as  a  se- 
curity for  his  debt,  the  surety,  on  offering  to  pay  the  creditor 
what  shall  be  found  due  to  him  upon  accoimt  stated,  may,  in 
equity,  insist  upon  the  property  of  the  principal  being  first 
applied  in  satisfaction  of  the  creditor's  debt.  In  this  country 
the  case  of  Jlayes  v.  Ward.,  4  John.  Chan.  123,  presents  the 
fact  of  a  creditor  in  New  Jersey,  where  all  the  parties  resided, 
taking  from  B,'the  holder  of  a  promissory  note,  indorsed  by 
the  plaintiff,  on  a  loan  of  money  alleged  to  be  usm-ious,  a  bond 


190  CESSION  OF  ACTIONS.      6TJBK0GATI0N. 

and  mortf!ja<^c,  wliich  was  ample  security  for  tlie  debt ;  and 
instead  of  resorting  to  tlie  bond  and  mortgage,  or  to  the 
principal  debtor,  sued  the  plaintiff  at  law  in  the  State  of 
New  York,  while  transiently  passing  through  it.  But,  upon 
these  facts,  the  Court  of  Chancery  granted  an  injunction  to 
stay  the  suit  at  law,  until  the  creditor  had  pursued  his  reme- 
dy on  the  bond  and  mortgage  in  New  Jersey. 

§  305.  Another  right  derived  from  the  civil  law,  and  in- 
corjiorated  into  the  equity  jurisprudence  of  this  country,  is 
what  is  termed  the  cession  of  actions,  or  sulrogation  to  all 
the  rights  of  the  creditor.  This  is  a  right  which  only  accrues, 
to  the  surety  upon  liis  satisfying  the  creditor's  demand ;  and 
entitles  him,  upon  such  satisfaction,  to  demand  and  receive 
from  the  creditor  a  cession  of  all  his  actions  against  the 
principal,  the  co-sureties,  and  all  those,  if  any,  holding 
pledges.  The  principle  established  is  :  that  a  surety,  upon 
payment  to  the  creditor  of  the  debt  of  the  principal,  is,  in 
equity,  entitled  to  the  benefit  of  all  securities  of  which  the 
creditor  is  possessed,  and  can  rendSr  available  against  the 
principal  debtor.  It  is  immaterial  whether  he  was  aware 
of  the  existence  of  the  securities,  and  became  surety  on  the 
strength  of  them  or  not ;  but  they  must  have  been  deposited, 
assigned,  or  made  chargeable  in  respect  of  the  same  transac- 
tion in  which  the  surety  became  liable.  This  right  of  subro- 
gation does  not  depend  upon  contract,  but  reposes  upon 
general  principles  of  justice  and  equity.  Mathevjs  v.  AiMii, 
1  Coinst.  595.  A  surety  by  refusing  to  take  the  control  of 
a  judgment  and  execution  against  the  principal  debtor,  when 
offered  to  him  by  the  creditor,  may  deprive  himself  of  the 
right  to  demand  subrogation,  when  the  debt  is  sought  to  be 
collected  from  him.  Uuhhell  v.  Carpenter,  1  Seld.  171.  So 
very  careful  is  this  right  of  subrogation  guarded  by  equity, 
and  so  fully  protected,  that  where  a  creditor  makes  an  agree- 
ment by  which  a  security  is  rendered  valueless  to  a  surety 
who  is  entitled  to  be  subrogated  in  respect  thereto,  the 
surety  who  has  paid  the  creditor,  after  a  judgment  obtained 


WHEN   SUEETY's   EIGHT   AGAINST   PEINCIPAL   OCCURS.     197 

against  him  in  ignorance  of  such  agreement,  is  entitled  to 
recover  from  the  creditor  the  amount  of  the  defeated  se- 
curity. Chester  V.  TliQ  Bcuik  of  Kinfjston^  16  N.  Yorl', 
336. 

QUESTIONS. 

TVliat  is  meant  by  tlic  right  of  discussion  uiuler  the  civil  law  ?  ITow 
is  this  regarded  by  the  common  law  ?  How  by  a  court  of  equity? 
What  are  the  rights  of  the  creditor  under  the  common  law  ?  "What 
right  does  equity  allow  as  to  discussing  the  person  ?  "What  right  as  to 
discussing  the  property  ?  Is  there  any  case  in  which  it  has  compelled 
the  creditor  to  look  lirst  to  the  property  pledged  ?  What  is  another 
right  allowed  to  the  surety  ?  Upon  what  is  this  allowed  ?  "What  does 
it  entitle  him  to  do?  "What  is  the  principle  that  is  here  settled?  Is  it 
necessary  that  the  surety  should  have  been  aware  of  their  existence,  or 
become  surety  upon  the  strength  of  them  ?  "What  are  they  limited  to  ? 
What  does  this  right  depend  upon  ?  How  may  a  surety  deprive  himself 
of  it  ?  "What  instance  shows  the  care  with  which  the  Court  of  Chan- 
cery guai-ds  it  ? 

PART    VI. 

EIGirrS  OF  TITE   SrHETY    AGAINST    TUE    rEIXCIPAL. 

§  396.  Ko  right  accrues  to  the  surety  against  the  princi- 
pal until  the  default  of  the  latter.  However  strongly  he 
may  he  approaching  to  utter  insolvency,  and  however 
necessary  it  may  be  to  the  surety  to  proceed  immediately 
against  him,  in  order  to  realize  any  thing  upon  his  debt,  yet 
he  can,  in  no  case,  take  any  step  until  the  debt  becomes 
due,  and  the  default  of  the  principal  debtor.  Immediately 
upon  that,  the  surety  may  discharge  the  del>t,  become 
subrogated  to  all  the  rights  and  securities  of  the  creditor,*  and 
may,  in  addition,  proceed  at  once  against  the  principal  to 
collect  the  debt.  ITc  then  stands  in  the  place  of  the  credi- 
tor, and  is  not  only  entitled  to  all  his  rights,  but  has  also 
acquired  a  right  of  his  own  to  sue  and  recover  for  money 
paid  for  his,  the  principal's  use.  It  is  immaterial  whether 
the  surety  voluntarily  paid  it,  or  was  compelled  to  do  so  by 
legal  proceedings.    Nor  is  it  essential  that  he  have  actually 


198  RIGHTS    OF   SURETY   AGAINST  CO-SUKETEES. 

paid  the  wliolc  debt.  If  he  has  done  that  which  is  equiva- 
lent to  it,  and  made  a  compromise,  it  is  sufficient ;  but  he 
can,  in  no  case,  recover  beyond  the  sum  ctually  paid,  and 
interest  thereon.  If  the  surety  lias  taken  from  tlie  principal 
any  security,  lie  must,  in  proceeding  against  him,  resort  to 
the  remedy  adapted  to  the  security.  His  right  is  to  recover, 
hot  only  the  amount  paid  with  interest,  but  also  all  costs 
and  charges  he  may  have  been  subjected  to  through  the  acts 
or  default  of  the  principal.  If  the  surety  has  discharged  a 
debt  due  from  several  debtors,  and  then  demands  the  entire 
debt  from  one  of  them,  he  should  cede  to  this  debtor  the 
actions  he  may  have  in  his  own  right  against  the  others,  and 
also  the  actions  of  the  creditor  to  whom  he  may  have  pro- 
cured a  subrogation. 

QUESTIONS. 
■When  does  the  right  of  the  surety  against  the  principal  occur  ?  What 
may  he  do  immediately  upon  default  of  the  principal  debtor  ?  In  whose 
place  does  he  stand  ?  "What  right  of  his  own  has  he  acquired  ?  Is  there 
any  difference  whether  the  payment  is  voluntary,  or  compulsory  ?  Is  it 
essential  that  the  whole  debt  should  be  paid  ?  How  is  it  in  case  of 
compromise  ?  "What  amount  can  he  recover  ?  "What  kind  of  remedy 
must  surety  adopt,  if  he  has  taken  security  ?  "What  amount  can  he  re- 
cover ?  Suppose  the  surety  has  discharged  the  debt  due  from  several 
debtors,  and  then  demands  the  entire  debt  from  one,  what  must  he  do  ? 

PAET  yn. 

EIGHTS  OF  THE   STTEETIES   AGAIXST  EACH  OXnEB. 

§  397.  The  creditor,  availing  himself  of  his  rights 
at  law,  collects  the  entire  debt  of  one  of  the  co-sureties, 
thei"t3  being  several  of  them  who  have  guaranteed  its  pay- 
ment. Tlie  inquiiy  now  is  : — what  is  the  right  of  that 
surety  as  against  his  co-sureties  who  were  equally  bound 
with  him  for  the  payment.  It  will  be  at  once  perceived 
that  the  co-sureties  have  no  contract  with  each  other.  Their 
contract  is  with  the  creditor  only,  and  with  him  each  has 
made  the  same  contract.  One  has  been  compelled  to  pay, 
but  it  is  only  upon  the  contract  between  him  and  the  credi- 


EIGHTS  OF  SUEETT  AGAINST  CO-SUEETIES.  199 

tor.  TVTiat  right  does  tliat  give  him  as  against  others  \vho 
had  entered  into  a  similar  contract,  but  have  paid  nothing  ? 
Clearly  no  right  based  upon  any  privity  of  contract,  because 
there  is  none.  The  next  inquiry  is,  whether,  in  'the  absence 
of  such  a  right,  equity  has  any  resources  by  which  it  can 
administer  any  relief.  And  the  answer  is  that  it  has.  It 
derives  its  principle  of  interference  from  the  fact  that  pay- 
ment of  a  common  debt,  for  which  all  were  equally  liable, 
having  been  made  by  one,  it  will  equalize  the  burden,  and 
compel  the  others  to  bear  theii*  just  proportion  of  the  loss. 
And  this  remedy  in  our  jurisprudence  is  not  confined  to  the 
Court  of  Chancery.  The  law,  following  equity,  also  gives 
the  right  of  contribution  between  co-sureties,  whether  they 
are  made  such  by  the  same  or  separate  instruments.  Neither 
is  a  surety  any  the  less  entitled  to  this  contribution,  because 
at  the  time  he  became  such,  he  was  ignorant  that  he  had 
any  co-sureties. 

§  398.  This  was  not  only  originally  a  matter  of  equity 
cognizance,  but  there  are  several  advantages  in  pursuing 
the  remedy  in  equity.  In  the  first  place,  if  the  surety  re- 
quires any  discovery  to  bo  made,  cither  as  to  the  persons 
who  are  his  co-sureties,  or  the  instruments  by  which  they 
become  such,  or  the  amount  or  contents  of  the  instruments, 
facilities  much  superior  are  afibrded  in  equity.  Another 
instance  where  equity  is  necessary  to  be  invoked,  is  where 
the  sureties  are  each  bound  in  penalties  that  are  distinct 
and  several.  Again,  the  law  can  only  recover  an  equal 
proportion  from  each  co-surety.  It  can  take  no  notice  of 
the  insolvency,  or  utter  inability  of  one  or  more  of  them  to 
pay  his  or  their  proportions.  Suppose  there  are  four  sure- 
ties, it  can  enable  a  recovery  of  one-fourth  against  each. 
But  two  of  them  are  insolvent,  and  can  pay  nothing.  The 
law  can  still  only  give  one-fourth  against  the  only  remaining 
solvent  one,  so  that,  in  that  case,  one  would  have  to  bear 
only  one-fourth,  and  the  other  three-fourths,  of  the  loss. 
The  Court  of  Chancery,  by  its  f)ower  of  specializing,  and 


200  WHAT   A  BUEETY"   CAN   llECOVER   AGAmST   CO-SUEETIES. 

adiiiiiiistcnng  s])ecilic  remedies,  can  apportion  the  burden 
among  tlioso  who  have  the  ability  to  bear  it,  and  thus  in 
the  case  proposed,  woukl  decree  that  the  solvent  surety, 
instead  of  paying  a  fourth,  should  pay  one-half  the  debt. 

§  399.  In  equity,  although  the  sureties  become  such  by 
several  distinct  instruments,  yet,  if  it  be  for  the  payment 
of  the  same  sum  of  money,  and  one  pays  more  than  an 
equal  share  of  that  sum,  he  may  comjicl  contribution  from 
his  co-sureties ;  but  if  the  agreement  be  that  each  shall 
assume  a  liability  for  only  a  given  portion  of  one  sum  of 
money,  no  such  right  of  contribution  among  them  can  be 
enforced.  And  the  same  principle  prevails  when  the  sureties 
arc  bound  by  different  instruments  for  equal  portions  of  a 
debt  due  from  the  same  principal,  but  the  suretyship  of  each 
is  a  separate  and  distinct  transaction. 

§  400.  One  surety  cannot  resort  to  his  co-sureties  for 
contribution,  unless  he  has  paid  more  than  his  ratable  por- 
tion of  the  debt  for  which  they  were  bound  in  common ; 
and  where  a  creditor  compounds  with  one  of  four  sureties, 
and  receives  a  dividend  upon  the  insolvency  of  another,  the 
other  two  must  have  paid  more  than  half  of  the  debt  before 
they  could  call  upon  the  others  for  contribution. 

§  401.  A  surety  is  not  entitled  to  recover  fi-om  his  co- 
sureties, interest  on  the  money  paid  by  him,  although  the 
debt  he  paid  was  bearing  interest.  l!^or  is  he  entitled  to 
contribution  for  the  costs  of  defending  an  action  brought 
against  him  by  the  creditor.  The  reason  of  this  must  be 
found  in  the  want  of  all  privity  of  conti'act  between  the  co- 
sureties, l^either  can  be  said  to  pay  money  or  defend  a 
suit  at  the  request  of  the  others.  The  principle  has  even 
been  carried  so  far  as  to  deny  the  recovery  of  costs  for  de- 
fending an  action,  where  the  party  sought  to  be  made  liable 
had  executed  to  the  plaintiff  a  bond  of  indemnity.  GilUit 
V.  Bijypon,  1  Moody  &  MalJcin,  406. 

§  402.  Two  sui'eties  are  requii-ed  to  be  fm-nished  for 
the  proper  performance  of  his  duties  by  a  public  officer.    A 


WHAT  DsTDEilNrrT  "WITHIN  STATUTE  OF  FEArDS.         201 

and  B  are  such  sureties,  but  before  they  become  such,  A  agrees 
verbally  with  B,  that,  in  consideration  of  his  becoming  a 
co-surety  with  him,  he  will  guarantee  him  against  all  loss 
and  damacre  rcsultino;  therefrom.  The  officer  becomes  a  de- 
faulter  to  a  large  amount,  and  the  sm-eties  consequently 
made  liable.  Two  questions  arise  here.  Can  B,  by  parol 
evidence,  show  the  contract  existing  between*  him  and  A, 
and  if  so,  is  the  undertaking  of  A,  which  is  thus  shown, 
within  the  statute  of  frauds,  so  as  to  protect  him  from  the 
effect  of  his  guaranty.  Both  these  points  have  recently 
arisen,  and  been  decided  in  Barry  v.  Hansom,  2  Kern.  462, 
in  which  it  was  held  that  parol  evidence  was  admissible  to 
ascertain  the  relations  between  the  sureties,  and  that  the 
verbal  indemnity  given  by  one  was  not  within  the  statute 
of  frauds.  The  latter  was  deemed  the  more  difficult  ques- 
tion, and  was  so  held  because  of  the  liability  of  the  guaran- 
tor to  pay  the  debt  against  which  he  indemnified.  It  was  in 
truth  a  guaranty  foimded  upon  his  own  liability.  But  the 
doctrine  seems  to  be  admitted  here,  as  had  before  been  settled 
in  the  Supreme  Court,  that  where  one  party  indemnifies 
another  for  becoming  liable  for  the  debt  or  default  of  a 
third  party,  such  an  indemnity  is  within  the  statute  of 
frauds,  and  therefore  required  to  be  in  wi'iting.  Kingslcy 
V.  Balcom,  4  Barh.  131. 


QUESTIONS. 

Upon  what  principle  is  one  surety  allowed  to  recover  contribution 
of  the  co-snretics  ?  What  does  the  law  do  in  this  respect  ?  Suppose 
the  surety  was,  at  the  time,  ignorant  that  he  had  co-sureties  ?  now- 
many  advantages  are  there  in  favor  of  pursuing  the  remedy  in  equity 
rather  than  at  law?  What  is  the  first?  The  second?  The  third? 
"What  is  the  rule  where  there  are  distinct  instruments  but  for  the  pay- 
ment of  the  same  sum  of  money  ?  "What  where  cacli  assumes  a  liability 
for  only  a  given  portion  of  the  same  simi  of  money  ?  What,  where 
each  is  bound  by  difTerent  instruments,  each  being  a  separate  and  dis- 
tinct transaction  ?  What  must  the  surety  do  before  he  can  resort  to  his 
co-sureties  for  contribution  ?    What  the  right  of  recovering  of  the  co- 


202  QUESTIONS  A3  TO   StJEETTSHIP. 

sureties  interest  and  costs  ?  What  in  case  of  indemnity  ?  What  the 
right  to  introduce  parol  evidence  to  acsertain  the  relations  of  the  sureties 
with  each  otlier  ?  Does  one  surety,  indemnifying  another,  come  witliin 
the  statute  of  frauds  ?  Does  one  person,  indemnifying  another  for  as- 
suming a  liability  for  a  third,  como  within  the  statute?  "What  is  the 
difference  between  the  two  cases  ? 


BOOK  m. 

RIGHTS. 


SECOND  DIVISION— RIGHTS  RELATING  TO  THB  THING. 

Under  this  division,  there  are  four  classes  of  rights,  de- 
rived from  four  different  species  of  contract,  all  having  re- 
lation to  the  thing,  or  personal  property.    Of  these  we  have, 

1.  The  contract  of  affreightment,  which  relates  to  the 
carriage  and  transportation  of  property,  and  the  letting  or 
leasing  of  ships  or  vessels  for  that  pui*posc. 

2.  Tlie  contract  of  hailmeiit,  which  relates  to  its  delivery 
to  others  npon  certain  trusts  to  be  exercised  about  it. 

3.  Tlie  contract  of  i7isicrance,  which  is  an  indemnity  for 
its  loss,  and, 

4.  The  contract  of  sale,  and  assignment,  which  makes 
of  it  an  ultimate  disposition. 


CHAPTER   I. 

CONTRACT  OF  AFFREIGHTMENT. 

This  has,  for  its  general  object,  the  carriage  or  transpor- 
tation of  property,  and  incidental  to  this,  the  leasing  or 
hiring  of  shijDS,  or  other  vessels,  for  that  pm'pose.  It  also 
embraces  the  carriage  and  delivery  of  goods ;  the  power 


204  rARTIES,    AND   CONTENTS   OF   CHARTEK   TAJiTY. 

and  authority  of  the  master ;  the  rights  and  duties  of  the 
merchant ;  and  the  consideration  of  general  average  and 
salvage.  It  will,  therefore,  include  every  thing  relating  to 
the  transportation  of  property,  except  the  peculiar  duties, 
liahilitics,  and  rights  of  the  common  carrier,  which  will  be 
considered  in  the  next  chapter.  Tlie  contract  of  affreight- 
ment itself  has  a  twofold  aspect,  the  one  relating  to  the 
vessel  in  which  the  goods  are  to  be  conveyed,  and  the  other 
to  the  goods  themselves  which  are  the  subject-matter  of 
conveyance.  The  first  of  these  gives  us  the  charter-party, 
the  second  the  lill  of  lading. 

PART   I. 

THE  CHAETEE-PAETY. 

§  403.  The  charter-party  is  a  written  contract  of 
affreightment,  by  which  an  entire  ship,  or  some  part  or 
portion  of  it,  is  let  to  a  merchant  for  the  conveyance  of 
goods,  on  a  particular  voyage,  in  consideration  of  the  pay- 
ment of  freight.  "We  have  here,  as  parties,  the  ship-owner, 
who  stands  responsible  for  the  ship,  and  the  merchant,  who 
seeks  to  employ  it  in  the  transportation  of  his  goods  in  con- 
sideration of  the  freight  which  he  pays  for  its  use.  There 
is  frequently,  however,  a  middle  man,  the  carrier, — who 
hires  the  ship  of  the  owner,  and  receives  the  goods  of  the 
merchant,  and  who  sustains,  therefore,  relations  to  both 
parties.  So,  not  unfrequently,  the  owner  of  the  vessel  runs 
it  himself,  thus  assuming  all  the  duties  of  the  carrier  in  re- 
lation to  the  goods  he  transports.  The  carrier,  or  merchant, 
who  thus  becomes  the  lessee  of  the  vessel  for  the  voyage, 
is  termed  the  charterer. 

§  404.  The  charter-party  ordinarily  contains :  1st.  The 
names  of  the  parties,  and  of  the  ship  or  vessel.  2d.  A  de- 
scription of  the  voyage  to  be  performed.  3d.  The  covenants, 
on  the  part  of  the  owner,  of  the  good  condition  and  sea- 
worthiness of  the  vessel,  and  the  promptness  and  dispatch 


MODE  OF  CONDUCTTJfG  DfLAND  COMMEECE.  205 

with  wliicli  she  sliall  receive  the  cargo  and  perform  the  voy- 
age. 4th.  The  excepted  perils,  for  which  the  shipowner 
does  not  mean  to  hold  himself  responsible,  and  against  which 
he  does  not  intend  to  insm-e.  These  are  usually  acts  of  God, 
or  public  enemies,  detentions  and  restraints  of  kings,  princes, 
rulers  and  republics,  fire,  the  dangers  and  accidents  of  the 
seas,  rivers,  and  navigation,  and  all  other  unavoidable  dan- 
gers and  accidents.  5th.  The  covenants  on  the  part  of  the 
charterer  to  load  and  unload  within  a  given  time,  usually 
specifying  an  allowance  of  so  many  lay,  or  running,  days 
for  loading  and  unloading  the  cargo,  providing  for  the  rate 
and  payment  of  the  freight,  and  also  the  rate  of  demurrage 
beyond  the  specified  time.  This  latter  tenn  is  employed  to 
express  the  allowance  or  compensation  for  the  delay  or  de- 
tention of  the  vessel ;  and  is  often,  although  not  necessarily, 
a  matter  of  contract.  The  coast  and  inland  commerce  of 
the  country  which  is  conducted  through  the  agency  oi 
sloops,  steam-boats,  and  canal  boats,  on  our  rivers,  lakes, 
and  canals,  is,  to  a  large  extent,  carried  on  under  season 
contracts,  by  which  the  owner  covenants  to  run,  through 
the  season,  or  such  part  of  it  as  he  may  specify,  his  vessel 
between  such  and  such  ports  and  places  ;  to  receive,  safely 
transport  and  deliver,  wherever  the  bills  of  lading  may  re- 
quire, all  such  goods  and  chattels  of  the  merchant  as  are 
specified,  or  all  that  may  be  ofiered  with  certain  exceptions ; 
the  merchant,  on  his  part,  covenanting  to  lade  and  freight 
the  vessel  during  the  season,  commencing  at  such  a  time, 
and  continuing  to  such  a  time,  paying  as  freight  for  the  same, 
at  the  times  specified,  at  and  after  the  several  rates,  which 
are  also  particularly  specified. 

§  405.  This  species  of  contract  admits,  of  course,  of  very 
great  variety.  It  is  not  essential  to  constitute  it  that  the 
ship  or  vessel,  as  in  the  cases  supposed,  should  be  exclu- 
sively chartered.  That  occurs  usually  where  commerce  is 
carried  on  in  its  most  extensive  fonns,  both  foreign  and 
inland.     Besides  the  chartered,  there  is  what  is  termed  the 


20C  NATURE   AND   EXTENT  OF   DEMUKIiAOE. 

general  sliip  or  vessel.  Tliis  is  one  wliicli  is  open  for  the  use 
of  merchants  generally,  in  which  any  number,  who  are  totally 
unconnected  with  each  other,  may  contract  upon  the  best 
terms  they  arc  able,  for  the  transportation  of  their  mer- 
chandise. 

§  406.  The  contract,  once  entered  into,  controls  the  rights 
of  the  parties.  Its  stipulations  must  be  strictly  perforaied 
on  both  sides.  One  illustration  of  this  is  found  in  the  case 
of  Glaholm  v.  Hays,  2  M.  (&  Gran.  257,  in  which  the 
phraseology  "  to  sail  on,  or  he/ore,  a  giveoi  day,^''  was  held 
equivalent  to  the  words  "  conditioned  to  sail,^^  and  hence 
formed  a  condition  precedent,  the  omission  to  perform 
which,  would  have  the  effect  of  discharging  the  other  party. 
The  question,  which,  perhaps,  most  frequently  arises, 
relates  to  the  claim  for  demurrage  which,  among  the  great 
multitude  of  occasions  for  delay,  often  arises  for  adjustment. 
Any  delay  beyond  the  arranged  period  will  subject  the 
merchant,  or  party-chartering  to  its  payment,  although  it 
may  arise  from  the  crowded  state  of  the  docks,  or  from 
some  unforeseen  impediment,  not  at  all  attributable  to  his 
fault ;  or  if  he  has  not  been  apprised  of  the  ship's  arrival, 
or  the  bill  of  lading  has  not  come  to  his  hands,  none  of 
these  furnish  sufficient  reason  to  excuse  his  engagement.  It 
must,  however,  be  a  delay  for  the  purpose  of  loading  or 
unloading,  and  hence  where  the  detention  was  occasioned 
by  ice,  which  prevented  her  from  sailing  after  being  loaded, 
the  demurrage  was  held  not  to  be  payable.  Pringle  v. 
Mollet,  Q  M.  (&  W.  80.  The  same  principle  prevails  where 
the  owners  interrupted  the  unloading  by  their  wrongful 
interference.  So  a  delay  in  starting  by  tempestuous  weather 
will  not  be  chargeable  upon  the  charterer.  Where  a  certain 
number  of  days  are  allowed  for  unloading,  they  are  to  be 
reckoned  from  the  vessel's  arrival  at  the  usual  place  of  dis- 
charging its  cargo,  and  not  at  the  entrance  of  the  port. 
"Where  a  certain  number  of  days  are  allowed  for  such  pur- 
pose, the  merchant  is  entitled  to  the  whole  of  the  time. 


IJABILITY  OF  CHAETEEEE.  207 

and  subjects  himself  to  no  cause  of  action  for  declining  a 
previous  offer  of  them,  provided  they  arc  unloaded  within 
the  time. 

§  407.  The  duty  of  the  owner  is  not  limited  to  duly 
preparing  and  equipping  the  vessel  for  the  voyage  ;  but  he 
is  also  bound  to  keep  her  in  good  condition,  and  fully 
equipped  throughout  its  continuance.  Any  considerable 
failure  on  his  part  would  exonerate  the  merchant  from  his 
obligations  under  the  contract.  If  either  party  is  not  ready 
by  the  time  appointed  for  loading  the  ship,  the  other  should 
look  elsewhere  for  his  ship  or  cargo,  for  he  can  only  hold 
the  defaulting  party  responsible  for  such  damages  as  he 
could  not,  by  reasonable  efforts,  have  prevented.  Where 
the  ship  is  hired  exclusively  for  the  voyage,  and  only  a  part 
of  the  cargo  is  put  on  board,  the  charterer  is  liable  for  what 
the  vessel  could  have  taken,  had  a  full  cargo  been  furnished.  • 
Duffie  V.  Harjnes^  15  John.  327. 

§  408.  If  the  charter-party  is  silent  as  to  the  condition 
of  the  vessel,  there  is  always  an  implied  warranty  that  the 
ship  is  sufficient  for  the  voyage,  and  hence  should  there  be 
a  latent  defect,  unknown  to  the  owner  and  nndiscoverable 
upon  examination,  the  owner  must  answer  for  the  damage 
which  has  been  occasioned  by  it.  Like  the  common  carrier, 
he  is  regarded  as  an  insurer  against  e^ery  thing  but  the  ex- 
cepted perils.  His  general  liabihty  is  very  similar  to  that 
of  the  common  earner,  as  he  is  made  answerable  for  all 
losses  other  than  what  arise  from  the  excepted  cases  of  tlie 
act  of  God  and  the  public  enemy.  His  responsibility  be- 
gins with  the  delivery  on  board  the  ship.  lie  must  see  that 
they  arc  "properly  stowed  in  a  manner  usual  with  such 
goods. 

§  400.  It  sometimes  becomes  important  to  determine 
who,  imdcr  the  provisions  of  tlic  charter-party,  is  the  owner 
of  the  ship  ;  whether  the  possession  of  the  ship  passes  to 
the  merchant,  so  as  to  constitute  liim,  for  the  time,  the 
owner  ;  and  thus  to  entitle  him  to  the  lien  for  freight.    The 


208  RELATIVE   RIGHTS   OF   CUAETERER   AND   OWNER. 

means  of  solving  this  question,  mnst  bo  gathered  from  the 
terms  of  the  instrument,  or  from  its  purpose  and  object. 
A  cluirterer  -will  be  considered  as  owner  for  the  voyage, 
who  not  only  hires  tlie  ship  during  its  continuance,  but  has 
exclusively  its  possession,  command,  and  navigation.  But 
where  the  general  owner  retains  the  possession,  command, 
or  navigation  of  the  ship,  and  contracts  to  carry  a  cargo  for 
the  voyage,  the  charter-party  is  considered  as  a  mere 
affreightment  sounding  in  covenant,  and  the  charterer  is  not 
clothed  with  the  character  or  legal  responsibility  of  owner- 
ship. Jlmoe  V.  Groverman^  1  Cranch^  214.  The  true  test  is 
whether  the  charterer  is  responsible  for  the  conduct  of  the 
master  and  mariners  during  the  voyage.  If  so,  he  must  be 
considered  as  occupying  the  position  of  owner. 

QUESTIONS. 

How  many  classes  of  rights  are  in  this  division?  Derived  from 
how  many  different  species  of  contract?  "What  contracts,  and  re- 
lating to  what  ?  What  has  the  contract  of  affreightment  for  its  general 
object?  What  does  it  embrace?  "What  is  included  under  it?  What 
double  aspect  has  the  contract  of  affreightment  ?  What  is  a  charter- 
party  ?  Whom  have  we  here  as  parties  ?  Who  may  be  a  middle  man 
between  the  two  ?  Who  is  the  lessee  of  the  vessel  termed  ?  WTiat  does 
the  charter-party  ordinarily  contain  ?  What  is  the  meaning  of  the  term 
demurrage  ?  How  is  commerce  on  our  inland  waters  carried  on  ?  By 
what  species  of  contract  ?  Is  it  essential  that  the  ship  or  vessel  should 
be  exclusively  chartered  ?  What  occurs  in  the  case  of  the  general  ship 
or  vessel  ?  How  is  the  contract  construed  ?  What  illustration  ?  What 
question  the  most  frequently  arising  ?  What  does  a  delay  beyond  the 
arranged  period  subject  to  ?  What  must  it  be  a  delay  for  the  purpose 
of?  How  when  occasioned  by  ice?  WTien  by  tempestuous  weather? 
When  are  days  allowed  for  unloading  reckoned  from  ?  When  a  certain 
time  allowed  for  unloading,  what  is  the  merchant  entitled  to  ?  What 
does  the  duty  of  the  owner  extend  to  ?  What  would  failure  on  his  part 
do  ?  What  if  either  party  is  not  ready  at  the  time  appointed  for  loading 
the  ship  ?  AVhat  is  the  liability  of  the  charterer  where  the  ship  is  hired 
for  the  voyage,  and  only  a  part  of  the  cargo  furnished  ?  When  charter- 
party  is  silent  as  to  the  condition  of  the  vessel,  what  is  the  implied 
warranty  ?    What  if  damage  results  from  a  latent  defect  ?    How  is  the 


BILL   OF  LADING.  209 

owner  regarded  ?  What  is  his  liability  similar  to  ?  What  answerable 
for  ?  When  does  his  responsibility  begin  ?  What  must  he  see  to  as  to 
storage  ?  What  question  as  to  ownership  sometimes  necessary  to  be 
determined,  and  why  ?  What  are  the  means  of  solving  tliis  question  ? 
In  which  of  the  two  cases  supposed  is  the  charterer  considered  thd 
owner,  and  in  which  not  ?    What  is  the  true  test  of  ownership  ? 

PART  n. 

THE  BILL    OF    LADLXG. 

§  410.  Shipped,  in  good  order,  by  A  B,  merchant,  in 

J.  K.    )   and  upon  the  good  ship  called  the ,  whereof 

No.  1.  f  C  D  is  master,  now  being  in  the  harbor  of  New 
York  and  bound  for  Liverpool,  England,  20  bales,  contain- 
ing 100  pieces  of  broadcloth,  marked  and  numbered  as  per 
margin,  and  are  to  be  delivered  in  the  like  good  order  and 
condition,  at  Liverpool  aforesaid ;  (the  act  of  God,  the 
public  enemy,  fire,  and  all  and  every  other  dangers  and  acci- 
dents of  the  seas,  rivers,  and  navigation,  of  whatever  nature 
and  kind  soever  excepted,)  unto  E  F,  merchant  there,  or  his 

assigns,  he  or  they  paying  freight  for  the  said  goods, 

per  piece,  freight,  with  primage  and  average  accustomed. 
Li  witness  whereof,  the  master  or  purser  of  the  said  ship, 
hath  affirmed  to  three  bills  of  lading  of  this  tenor  and  date ; 
one  of  which  bills  being  accomplished,  the  other  two  stand 
void. 

Dated  at  New  York,  the 

day  of . 

The  bill  of  lading,  of  wliich  the  above  is  a  copy,  has 
relation,  it  will  be  perceived,  solely  to  the  conveyance  of  the 
cargo,  while  the  charter-party  contracts  for  the  hire  of  the 
ship.  It  is  signed  by  the  master  as  agent  for  the  ship-owner 
or  charterer,  and  answers  the  double  purpose  of  a  receipt  of 
the  goods,  and  an  agreement  to  carry  them  to  tlieir  place 
of  destination.  As  a  receipt  it  may,  as  between  tlie  original 
parties,  be  varied  and  explained  by  parol.  It  will  be  seen 
that  three  bills  of  lading  are  made  out  and  signed.  One  of 
14  I 


210  NEGOTIABILITY   OF   BILL   OF   LADING. 

these  is  for  tlie  frciglitcr,  anotlicr  for  tlie  consignee,  factor, 
or  agent  ahruad,  and  a  third  nsiially  kept  by  the  master  for 
his  own  use.  The  whole  make  but  one  contract  as  to  the 
master  and  owners.  It  may  happen  that  different  parts  are 
indorsed  to  ditFerent  persons,  and  in  that  case  a  competition 
may  arise  as  to  the  goods.  Tlie  rule  here  generally  is  that 
where  the  equities  are  equal,  the  property  passes  by  the  bill 
first  indorsed, 

•  §  411.  The  most  peculiar  feature  noticeable  about  a  bill 
of  lading  is  its  negotiability,  or  rather  the  form  of  it ;  for 
the  question  as  to  whether  it  is  really  negotiable  so  as  to 
transfer  a  perfect  title  to  the  indorsee  in  the  Bame  sense  in 
which  the  title,  and  rights  incident  thereto,  become  trans- 
ferred to  the  indorsee  by  the  indorsement  by  the  proper 
party,  of  a  bill  of  exchange  ;  or  whether  such  indorsement 
operates  merely  as  an  assignment,  giving  to  the  assignee  the 
right  simply  to  the  possession  of  the  goods,  subject  to  the 
real  rights  of  parties,  is  one  of  the  most  difficult  known  to 
the  law,  and  one  that  can  hardly  yet  be  deemed  fully  settled. 
Lichharrow  v.  Mason,  2  T.  B.  G3.  1  II.  Black.  357.  Note 
in  Newsom  v.  Thornton,  6  East,  IT.  Chancellor  Kent,  2 
Kent's  Com.  549,  considers  the  understanding  of  the  law  at 
"Westminster  Hall  to  be  that  the  quality  is  strictly  negotia- 
ble, and  that  a  title  free,  and  discharged  of  all  equities,  is 
transmitted  to  the  hona  fide  indorsee  for  value.  But  in 
American  editions  of  1  Smithes  Leading  Cases,  Y51,  in  a  note 
to  Lickharrow  v.  Mason,  it  is  attempted  to  be  shown  by  an 
analysis  of  the  adjudged  cases,  that  the  possession  of  the  bill 
of  lading  can  clothe  the  holder  with  no  greater  powers  than 
would  result  from  the  actual  possession  of  the  goods.  That 
it  does  not  constitute  title  in  itself,  and  merely,  therefore, 
assigns  whatever  interest  the  consignor  might  have  in  the 
goods.  This  may,  under  all  the  circumstances,  still  be  re- 
garded as  an  open  question. 

§  412.  Tliere  is  no  doubt,  however,  but  that  the  negoti- 
able or  assignable  quality  of  the  bill  of  lading  will  enable 


BILL    OF   LADING   CONTROLS   THE    GOODB.  211 

the  consignor  to  control  the  direction  which  the  goods  shall 
take.  And  hence,  if  the  bill  provide  for  the  delivery  to  "  A 
for  tlie  use  of  B,"  the  purpose  being  to  secure  a  debt  due 
from  the  consignor  to  B,  the  assent  of  the  latter  will  be  pre- 
sumed, and  the  property  will  pass  at  once  to  B,  and  cannot 
be  attached  for  a  debt  of  the  consignor.  Grove  v.  Brien, 
8  IIoio.  S.  C.  429.  And  this  power  of  transferring  property 
by  means  of  the  assignable  quality  of  the  bill  of  lading,  will 
remain  to  the  consignor  as  long  as  the  goods  are  in  the 
hands  of  any  agent  of  his,  and  he  may  alter  their  destina- 
tion while  on  board ;  so  that,  if  the  master  sign  a  bill  of 
lading  for  the  delivery  of  goods  to  A,  or  his  assigns,  and 
the  consignor  afterwards  transmits  a  bill  of  lading  to  B, 
making  them  deliverable  to  him,  B  will  be  entitled  to  them, 
if  nothing  further  had  been  done  to  vest  the  property  in  A. 
Mitchell  V.  Ede,  11  Adol.  c&  Ellis,  888.  The  consignment 
may  also  be  made  subject  to  any  condition  that  the  consignor 
may  choose  to  insert,  and  then,  if  received,  it  must  be  subject 
to  the  condition.  Under  the  bill  of  lading,  the  goods  go  into 
the  possession  of  the  master  or  ship-owner,  who  thencefor- 
ward becomes  a  common  can-ier  of  the  goods,  subject  to 
the  exceptions  embraced  in  the  bill,  until  their  delivery  to 
the  consignee. 

QUESTIONS. 

"What  does  a  bill  of  lading  have  relation  to  ?  "What  the  charter- 
party  ?  By  whom  is  the  bill  of  lading  signed  ?  What  purpose  does  it 
answer  ?  How,  as  a  receipt,  may  it  be  varied  or  explained  ?  How  many 
bills  of  lading  are  made  out  and  signed  ?  For  whom  is  each  one  ? 
What  do  the  whole  make  out  ?  What  is  the  rule  when  different  parts 
are  delivered  to  different  persons  ?  What  is  the  most  peculiar  feature 
noticeable  about  the  bill  of  lading  ?  Which  is  it,  negotiable  or  assigna- 
ble ?  By  what  means  is  the  consignor  enabled  to  control  the  direction 
which  the  goods  shall  take  f  What  illustration  ?  How  long  will  the 
power  of  controlling  property  remain  with  the  consignor  ?  What,  if  the 
consignment  be  made  subject  to  a  condition  ?  Where  do  the  goods  go 
under  the  bill  of  lading,  and  subject  to  what,  and  with  what  exception? 


212  OCCASIONS   FOE  MAiHTIME  LOAIIS. 

PART  III. 

OAJJEIAGE  AND   DELIVERY   OF   GOODS. 

The  last  part  leaves  the  goods  in  the  hands  of  the  com- 
mon carrier  for  transportation.  Next,  therefore,  in  order, 
follow  his  duties  in  relation  to  the  carriage  and  delivery  of 
the  goods,  and  the  heavy. responsibilities  he  places  himself 
nnder.  But  as  this  forms  a  very  important  branch  of  the 
law,  we  shall  defer  it  to  that  connection  in  which  it  gen- 
erally comes  up  for  consideration. 

PART  IV. 

POWER  AND   AtlTnOEITT    OF    THE  MASTER,   IN  EEFEEENCE  TO  MARITIME 

LOANS. 

§  412,  a.  The  heavy  weight  of  responsibility  under  which 
the  common  carrier  acts,  and  the  many  unforeseen  hazards 
attending  the  movements  of  commerce,  have  led  to  the 
necessity  of  maritime  loans,  and  the  power  and  authority 
vested  in  the  master  in  reference  to  them.  The  character 
of  these  loans,  the  securities  upon  which  they  rest,  and  the 
power  and  authority  involved  in  their  creation,  as  well  as 
the  mode  of  their  enforcement,  are  all  peculiar,  and  have 
grown  out  of  the  necessities  of  commerce.  The  master  of  a 
vessel  meets  with  a  disaster,  by  which  an  unforeseen  de- 
mand is  made  upon  him  for  money  to  enable  him  to  make 
repairs  and  complete  his  voyage.  He  arrives  at  a  port 
where  there  is  money,  but  no  knowledge  on  the  part  of  any 
one  there  of  the  responsibility  of  the  master  or  owners  of 
the  vessel.  But  there  is  the  vessel,  its  accruing  freight,  and 
its  cargo,  all  within  the  view  of  the  capitalist.  But  neither 
of  these  belongs  to  the  master,  who  is  the  mere  agent  of  the 
owners,  and  ordinarily,  according  to  the  principles  of  the 
common  law,  he  could  give  to  others  no  rights  as  to  either. 
But  a  higher  law  here  interposes,  and  permits  him,  with  a 
view  to  the  safety  of  his  ship  and  cargo,  to  pledge,  for  the 


SUBSTANCE   OF   BOTTOMKY   BOND.  213 

necessary  funds,  the  vessel,  and  freight,  and,  if  necessary, 
even  the  cargo.  This  is  done  upon  what  are  termed  bottom- 
ry and  respondentia  bonds.  If  the  loan  be  made  upon  the 
vessel  and  accruing  freight,  it  is  termed  bottomry,  if  upon 
the  cargo,  respondentia  l)onds.  The  object,  and  most  of  the 
princif)les  governing  both,  are  the  same. 

§  412,  T).  Tlie  substance  of  the  contract  in  the  case  of  the 
hottomry  lond  is  that,  in  consideration  of  a  certain  sum  of 
money  advanced  for  the  use  of  the  ship,  the  borrower  un- 
dertakes to  rejDay  the  same  "with  a  stipulated  rate  of  interest, 
provided  the  ship  shall  terminate  her  voyage  successfully  ; 
and  for  the  performance  of  the  contract,  he  binds  or  hypothe- 
cates the  keel,  or  lottom  of  the  ship,  and  hence  the  origin 
of  the  term  hottomry.  This  may  be  in  the  form  of  a  deed, 
called  a  bottomry  bill,  but  more  generally  it  is  in  that  of  a 
bond.  But  in  whatever 'form,  the  contract  should  be  clearly 
stated, — the  amount  loaned,  the  interest  to  be  paid,  usually 
far  beyond  the  legal  rate  of  interest ;  the  condition  upon 
which  repayment,  both  of  principal  and  interest,  depends ; 
the  safe  arrival  of  the  vessel  at  the  termination  of  the 
voyage ;  and  the  number  of  days  within  which  the  same 
shall  be  paid  after  such  arrival.  It  will  be  seen  from  this, 
that  the  lender  takes  the  entire  risk  of  the  voyage.  The 
fact  that  not  only  the  interest,  but  the  capital  also,  is  put  in 
jeopardy,  removes  it  from  the  taint  of  usury,  and  tlms 
avoids  all  objection  from  that  source.  There  are  no  techni- 
cal terms  required  in  the  formation  of  this  contract.  Tlie 
tersest  mercantile  phraseology  may  be  employed.  Tlie 
words 

"  I  bind  myself,  my  ship  and  tackle,  to  pay  the  sum 
borrowed,  with  twelve  per  cent,  bottomry  premium,  in  eight 
days  after  my  arrival  at  the  port  of  London,"  were  held 
sufficient ;  the  words  "  my  arrival,"  being  construed  by  the 
court  to  mean  the  ship's  arrival.  Simonds  v.  Hodgson,  3 
B.  (&  Ad.  50.    The  bond  usually  specifies  the  risks  which 


214  EFFECT  OF  SUCCESSIVE  BOTTOMEY  BONDS. 

the  lender  is  to  run,  and  these  are  essentially  the  same  as 
those  against  which  the  insurer  indemnifies. 

§  413.  The  condition  of  repayment  is  the  safe  arrival  of 
the  vessel.  Tliis  suggests  the  question  as  to  the  character 
of  loss  which  can  have  the  cfiect  of  exonerating.  And  here 
there  is  no  such  thing  as  a  constructive  total  loss.  Nothing 
short  of  utter  annihilation  will  discharge  the  borrower.  K 
any  jDortion  of  the  vessel  be  saved,  it  continues  subject  to 
the  hypothecation,  and  to  that  only  can  the  lender  look  for 
his  indemnity.  The  bottomry  bond  is  really  a  mortgage, 
by  which  the  master  pledges  the  ship  as  security  for  the 
money  borrowed,  covering  also  the  freight, — the  shij)'s  earn- 
ings,— during  the  time  limited.  On  the  safe  arrival  of  the 
ship,  or  of  any  part  of  it,  if  the  sum  borrowed  and  interest 
be  not  paid  within  the  stipulated  time,  the  lender  applies  to 
the  Court  of  Admiralty,  in  which  such  proceedings  may  be 
had,  as  that  a  decree  of  sale  may  be  obtained,  the  proceeds 
of  which  are  divided  among  tlie  respective  claimants  as 
justice  shall  dictate.  And  if  there  are  several  successive 
bottomry  bonds,  the  ordinary  principles  that  govern  succes- 
sive liens  are  reversed,  and  instead  of  being  the  first  that  is 
preferred  in  the  payment,  it  is  the  last,  and  the  discharge 
is  in  the  inverse  order  in  which  they  ai'e  given.  The  prin- 
ciple which  gives  origin  to  this  rule,  is  derived  from  the 
equity  of  the  case.  It  is  the  last  loan  that  enables  the  vessel 
to  reach  the  port  in  safety,  and  but  for  it  all  the  previous 
ones  would  be  lost.  As  that,  therefore,  is  really  the  means 
of  securing  the  payment  of  the  others,  there  is  a  clear  equity 
in  allowing  it  the  precedence  in  payment.  One  condition, 
however,  is  essential  to  be  made  out,  and  that  is,  that  the 
last  loan  was  necessary  to  enable  the  vessel  to  continue  and 
complete  its  course. 

§  414.  A  question  may  here  arise  as  to  the  rights  of  the 
lender  where  the  ship  or  cargo  is  lost  through  the  default  of 
the  master.  The  loss  does  not  then  fall  withiu  the  perils 
wliich  are  at  the  risk  of  the  lender.     That  is  not,  therefore, 


WHAT   IS   ESSENTIAL   TO   B0TT03IKY   BONDS.  215 

a  hazard  wliich  he  assumes.  As  the  loss  occurs  through  the 
ignorance  or  misconduct  of  the  master,  the  lender  is  enti- 
tled to  the  legal  presumption,  that  but  for  that,  the  vessel 
would  have  reached  the  port  in  safety.  Such  a  loss,  there- 
fore, works  a  forfeiture  of  the  bond,  which  must  accordingly 
be  paid,  although  the  lender  now  has  only  the  personal  se- 
curity of  tlie  master  and  owners  to  rely  upon.  So  also  if 
the  ship  be  lost  on  the  voyage,  and  the  cargo  forwarded  by 
another  ship,  the  lender  is  entitled  to  payment,  as  the  con- 
tract, in  its  si:>irit,  has  then  been  performed. 

§  415.  It  is  essential  to  the  very  natui'e  of  this  contract 
that  there  be  risk  and  hazard,  and  also  that  the  ground  and 
reason  of  the  loan  should  be  necessity.  "  JVcccssity"  says 
Lord  Stowoll,  "  is  the  vital  principle  of  hypothecation,  and 
the  Court  of  Admiralty  will  consider  every  circumstance, 
will  go  into  the  whole  history  of  the  voyage,  in  order  to 
determine  whether  there  be  that  necessity,  without  which 
an  instrument  of  hypothecation  is  void."  After  the  hazard 
has  once  been  incurred,  the  condition  is  satisfied.  Tlie 
voyage  once  commenced  after  the  completion  of  the  loan, 
although  the  vessel  be  forced  back  by  the  perils  of  the  sea 
into  the  port  of  departure,  and  the  voyage  be  finally  aban- 
doned, yet  is  the  lender  entitled  to  his  principal  and  interest, 
for  the  whole  has  been  subject  to  hazard.  The  bond  depends 
exclusively  upon  the  security  of  the  ship,  and  cannot  be  made 
to  cover  advances  upon  the  personal  security  of  the  bor- 
rower. But  it  constitutes  the  first  lien  uj^on  the  ship ;  and 
athough  there  may  have  been  a  mortgage  or  a  prior  lien  of 
any  other  description  upon  it,  yet  this  supersedes  all  others, 
and  is  to  be  first  satisfied  ;  and  tliis,  it  is  obvious,  must  be 
so,  or  the  lender  could  never  have  any  safety  in  making  his 
advances. 

§  41G.  It  has  been  made  a  question  whether  as  the  motive 
to  make  the  loan  may  be  supposed  to  have  ceased  upon  the 
departure  of  the  ship,  a  loan  of  this  description  can  be  good 
if  made  after  the  ship's  departure,  and  while  at  sea  ;  but  it 


21G  TAIiTY    TO   EXECUTE   BOTTOMEY   BONDS. 

secins  now  to  bo  generally  understood  in  this  country  that 
Bucli  loan  is  good,  if  made  after  the  ship  has  departed,  and 
the  goods  arc  at  risk.  The  lender  assumes  no  hazard  as  to 
the  application  of  the  money.  The  master  may  wholly 
misapply  it,  without  affecting  the  rights  of  the  lender.  Hie 
latter  has  only  to  convince  himself  of  the  necessity  of  the 
loan,  and  to  take  the  aj^propriate  risks.  He  has  nothing  to 
do  with  the  use  made  of  the  money  after  he  has  loaned  it. 

§  417.  fflic  master  of  the  vessel  has  the  undoubted  power 
and  authority  to  make  this  loan,  but  only  under  certain  cir- 
cumstances. It  must  be  in  the  absence  of  the  owner,  after 
the  vessel  has  started  from  its  port,  and  has  reached  some 
foreign  port,  where  the  owner  does  not  reside.  The  law, 
however,  does  not  render  it  necessary  that  the  ship  or  cargo 
should  be  in  a  foreign  port.  A  loan  of  this  character,  made 
in  a  j)ort  of  the  same  country  where  the  owner  resides,  is 
good,  if  it  arise  from  necessity,  and  there  be  no  ready 
means  of  communication  with  such  owner.  He  has  no 
right  to  hypothecate  for  a  pre-existing  debt,  and  the  neces- 
sity of  the  loan  must  be  shown  to  have  existed  at  the  time 
it  was  made,  and  that  the  master  had  no  other  resource  for 
raising  the  money. 

QUESTIONS. 
On  what  are  maritimG  loans,  and  the  power  and  authority  of  the 
master,  grounded  ?  What  have  they  grown  out  of  ?  Under  what  cir- 
cumstances are  they  justifiable  ?  "What  is  a  bottomry  bond  made  upon  ? 
What  a  respondentia?  What  is  the  substance  of  the  contract  in  a  bot- 
tomry bond  ?  In  what  form  may  the  contract  be  ?  What  is  the  condi- 
tion upon  which  the  repayment  depends  ?  Who  takes  the  risk  of  the 
voyage  ?  What  removes  the  contract  from  the  taint  of  usury  ?  What 
may  not,  and  what  may,  be  employed  in  the  formation  of  the  contract? 
What  does  the  bond  usually  specify  ?  And  what  are  these  risks  ?  What 
kind,  or  extent  of  loss,  will  excuse  repayment  ?  What,  if  any  portion 
of  the  vessel  be  saved?  What  is  the  bottomry  bond  in  substance? 
What  does  it  do  ?  What,  and  where  is  the  remedy  ?  What  is  the  rule, 
where  there  are  several  successive  bottomry  bonds  ?  Why  is  the  general 
rule  reversed  in  this  case  ?  What  condition  necessary  to  give  lien  to  the 
last  bond  ?    What  is  the  rule  where  the  loss  occurs  throuah  default  of 


DUTIES  OF  THE  MEECHANT.  217 

the  master  ?  What  effect  does  such  a  loss  work  upon  the  bond  ?  How- 
is  it  if  ship  be  lost,  and  cargo  forwarded  by  another  ?  What  is  the 
ground  of  all  risk  and  hazard  ?  When  is  the  condition  satisfied  ?  How 
is  it  if  the  vessel  is  forced  back,  and  voyage  abandoned  ?  What  does 
the  bond  depend  upon  ?  What  kind  of  lien  does  it  constitute  ?  Is  a 
maritime  loan  good,  if  made  at  sea  ?  Does  the  lender  assume  any  hazard 
as  to  application  of  the  money  ?  Suppose  the  master  misappKes  it  ?  Of 
■what  has  the  lender  to  convince  himself?  Under  what  circumstances 
has  the  master  power  and  authority  to  make  this  loan  ?  How  as  to 
presence  of  owner  ?  Can  it  be  made  in  a  port  other  than  a  foreign  one  ? 
What  must  be  shown  at  the  tune  to  justify  the  loan  ? 

PART  V. 

DUTIES   OF  THE  MEBCIIAXT. 

§  418.  The  duties  of  the  merchant  relate  to  the  full  and 
perfect  performance  of  what  he  has  undertaken  by  his  con- 
tract. He  must  lade  the  ship  within  the  stipulated  time, 
and  if  no  time  be  stipulated,  within  a  reasonable  time.  It 
must  be  with  the  stipulated  cargo ;  and  he  must  put  on 
board  no  contraband  goods,  or  those  of  any  description  that 
will  work  a  forfeiture.  A  failure  in  any  of  these  respects 
will  subject  him  to  the  damages  incurred,  lie  must  also 
pay  the  charges  due  on  his  commodities.  Of  these,  by  far 
the  most  important  is  the  payment  of  freight ;  but  this 
will  be  more  appropriately  considered  in  connection  with 
the  law  of  common  carriers. 

PART  VI. 

GENERAL  AVEEAGE. 

§  419.  Independent  of  the  freight,  there  are  some  other 
charges  of  small  amount  which  the  merchant  is  called  upon 
to  pay,  and  which  are  usually  provided  for  in  the  bill  of 
lading.  Such  is  iwimage^  which  is  a  small  customary  pay- 
ment to  the  master  for  his  care  and  trouble.  So  also  de- 
murrage^ which  has  already  been  considered ;  and  average^ 
by  which  is  meant  several  petty  charges,  such  as  towage,  bea- 
conage, &c.    But  another  charge,  of  much  more  importance 


218  -WHAT   GIVES   EISE   TO   GEl^EAL   AVEEAGE. 

to  consider,  and  which,  like  contracts  of  Lottormy  and 
respondentia,  grows  out  of  the  peculiarity  of  commercial 
navigation,  is  what  is  termed  general  average.  This  means 
the  contribution  which  the  property  saved  is  called  upon  to 
make,  in  order  to  ]3ay  for  the  loss  of  other  property  which 
has  been  voluntarily  sacrificed  in  order  to  save  the  re- 
mainder. The  simplest  case  is  that  of  a  storm  at  sea  too 
severe  for  a  heavily  laden  vessel  to  weather.  The  obvious 
resource  of  the  captain,  or  the  master  in  command,  is  to 
lighten  the  vessel  by  throwing  overboard  the  less  expensive 
and  more  ponderous  merchandise,  and  by  that  means  to 
enable  it  to  outride  the  tempest,  with  as  large  a  part  of  her 
cargo  as  possible.  The  owners  of  that  portion  of  the  cargo 
which  was  sacrificed  to  secure  the  safety  of  the  rest,  had  an 
equal  right  with  the  others  to  have  it  transported  to  its 
place  of  destination,  and  there  to  realize  its  proceeds.  There 
is  therefore  no  reason  why  they  should  be  called  upon  to 
suffer  the  entire  loss,  while  the  others,  whose  property  was 
saved  at  its  expense,  should  suffer  nothing.  There  arises, 
therefore,  from  the  very  nature  of  the  case,  an  obvious 
equity,  out  of  which  has  grown  the  legal  rule,  that  all  the 
property  saved,  shall  contribute  to  all  losses  voluntarily  in- 
curred to  save  it  from  a  like  destruction. 

§  420.  The  first  inquiry  that  naturally  presents  itself 
here,  is  to  ascertain  the  cases  in  which  the  law  will  enforce 
general  average.  And  here,  although  the  principle  is  a 
plain  one,  and,  it  should  seem,  ought  to  present  no  real  diffi- 
culties, yet  many  do  occur  in  its  application.  In  the  first 
place,  it  is  limited  to  such  voluntary  sacrifices  as  secure  the 
safety  of  ship  or  cargo,  or  a  portion  of  it,  and  has  no  appli- 
cation where  any  loss  of  life  has  been  prevented  by  the 
sacrifice.  It  is  the  voluntary  sacrifice  of  property,  to  save 
other  property,  that  can  alone  bring  it  within  the  principle. 

§  421.  But  the  cases  in  which  property  has  been  sacrificed 
to  save  other  property,  seem  somewhat  conflicting  as  to 
whether  they  do,  or  do  not,  come  within  the  principle.     A 


WHAT  EMBKACED  TJNDEE   GENEEAL  AVEEAGE.  219 

sliip  is  injured  by  a  peril  of  the  seas,  and  compelled  to  go 
into  port  to  refit.  Are  tlio  wages  and  provisions  of  tbe  crevr, 
during  the  detention,  such  losses  as  require  contribution  by 
general  average  ?  In  ISTew  York  and  Massachusetts  they 
are  ;  in  England  they  are  not.  So  it  has  been  held  that  the 
wages  and  provisions  of  the  crew,  during  capture  and  de- 
tention  for  adjudication,  are  a  proper  subject  for  general 
average ;  while  in  the  case  of  a  vessel  detained  by  an  em- 
bargo, they  are  not  so  subject,  but  arc  chargeable  exclu- 
sively upon  the  freight.  The  cost  of  repairs  which  benefit 
the  ship  alone,  and  would  have  been  unnecessary  in  the  port 
in  which  they  were  made,  do  not  come  within  the  prin- 
ciple ;  but  if  they  are  incurred  for  the  benefit  of  the  cargo, 
and  to  save  that,  they  come  within  the  principle. 

§  422.  The  principle  embraces  every  voluntary  saciifice 
or  surrender  to  save  property.  Where  a  part  of  the  cargo  is 
voluntarily  delivered  up  to  a  pirate  or  an  enemy,  as  a  ran- 
som or  contribution  to  save  the  vessel  and  residue  of  the 
goods,  that  which  is  saved  must  contribute  to  such  loss.  So 
also  masts,  cables,  and  other  equipments  which  are  cut 
away  to  save  the  vessel  in  a  case  of  extremity,  are  to  be 
contributed  for  by  general  average ;  but  if  the  masts  and 
sails  are  destroyed  as  a  consequence  of  carrying  an  unusual 
press  of  canvass,  they  are  not  the  subjects  of  such  contribu- 
tion, although  they  were  cut  away  and  abandoned  for  the 
preservation  of  the  ship,  Tliis  principle  does  not  limit  to 
the  actual  loss  or  injury  of  the  subject-matter,  as  to  which 
the  contribution  is  claimed,  but  embraces  also  such  expenses 
as  are  incurred  in  and  about  it  for  the  common  good,  as  the 
unloading  the  cargo  in  order  to  repair  the  ship.  The  volun- 
tary stranding  of  the  ship  to  escape  tempests,  or  the  pursuit 
of  an  enemy,  has  always  been  held  to  entitle  to  general  ave- 
rage where  the  ship  was  subsequently  recovered,  and  per- 
formed her  voyage.  But  there  has  been  a  conflict  as  to  such 
right  when  the  ship  was  lost.  In  this  country,  however, 
the  preservation  of  the  cargo  in  such  case  entitles  to  con- 


220  PROPEETY  SUBJECT   TO  GENERAL  AVEKAQE. 

tribution.  Columbian  Ins.  Company  v.  Ashhy,  13  Peters^ 
331. 

§  423.  Tlie  loss  which  it  is  thus  proposed  to  compensate 
must  not  have  been  accidental,  or  the  result  of  natural 
causes.  The  casting  overboard  and  loss  must  have  pro- 
ceeded from  no  such  sudden  impulse  as  to  exclude  the  exer- 
cise of  judgment  and  will.  In  all  cases  where  it  is  possible, 
a  consultation  should  be  had.  Wlierc  the  peril  is  imminent, 
that  may  not  be  possible,  but  a  deliberate  act  of  the  will  is 
still  rendered  necessary.  This  is  evidenced,  and  required  to 
be  so,  by  the  kind  and  character  of  the  property  sacrificed. 
Tlie  first  abandoned  must  be  those  things  that  are  the  least 
necessary,  the  heaviest,  and  of  the  lowest  value.  The  ap- 
proach must  be  gradual,  and  only  as  the  necessity  increases, 
to  the  abandonment  of  articles  of  great  value. 

§  424.  This  suggests  another  subject  of  inquiiy,  and  that 
is,  what  goods  are  liable  to  contribution,  and  in  what  pro- 
pol*tions.  The  general  rule  is  that  all  merchandise  of  every 
description  is  thus  liable.  As  the  safety  obtained  thereby 
is  the  ground  of  the  contribution,  bullion  and  jewels,  which 
are  on  board  as  merchandise,  are  not  exempt.  The  rule 
subjects  to  contribution  those  articles  that  pay  freight,  and 
limits  it  to  freight-paying,  making  articles  contribute  ac- 
cording to  their  value,  and  not  their  weight.  Instru- 
ments of  defence  and  provisions,  as  they  are  necessary  to 
all,  do  not  ordinarily  contribute ;  but  if  they  are  sacrificed 
for  the  common  safety,  they  are  to  be  paid  for  by  contribu- 
tion. The  wages  of  seamen  contribute  only  to  the  ransom 
of  the  ship.  The  principle  of  voluntary  loss  for  the  purpose 
of  saving,  applies  also  to  the  case  where  a  part  of  the  cargo 
is  sold  for  the  necessities  of  the  ship  ;  as  this  is  a  sacrifice 
for  a  similar  purpose  as  the  case  of  an  abandonment ;  and 
if  the  ship  be  afterwards  lost,  the  goods  saved  must  contri- 
bute towards  the  loss  of  the  goods  sold,  the  same  as  if  they 
had  been  thrown  overboard.   . 

§  425.  One  more  inquiry  under  this  head  remains,  and 


now  GENEEAL  AVERAGE  AEEIVED  AT.        221 

that  relates  to  the  mode  of  adjusting  the  average.  What 
property  is  to  contribute,  and  at  what  price  ?  The  practice 
is  to  make  and  state  an  account  of  the  articles  that  are  to 
contribute,  in  which  the  property  sacrificed  is  also  included, 
because  otherwise  its  owners  would  receive  its  full  value 
without  paying  any  thing  towards  the  loss.  Another  ac- 
count is  then  made  of  the  losses  which  are  to  be  replaced. 
The  valuation  adopted  in  both  these  accounts  is  the  clear 
net  price  which  they  would  have  yielded,  after  deducting 
freight,  at  the  j)ort  of  discharge.  The  average  is  commonly 
adjusted  by  the  brokers,  and  if  insured,  is  paid  by  the  in- 
surers of  the  different  parties  chargeable.  Tlie  ship  owners 
contribute  according  to  her  value  at  the  end  of  the  voyage, 
and  according  to  the  net  amount  of  the  freight  and  earnings. 
When  the  vessel  is  lost,  and  is  to  be  replaced  by  conti'ibu- 
tion,  her  value  is  estimated  at  her  port  of  departure,  allow- 
ing for  the  wear  and  tear  up  to  the  time  of  the  loss.  It  is 
the  duty  of  the  master  to  have  an  adjustment  made  at  the 
port  of  destination  upon  arrival,  and  he  has  a  lien  upon  the 
cargo  to  enforce  the  payment  of  the  contribution.  Strong 
V.  The  New  York  Firemen  Insurance  Comjpany^  11  John. 
323. 

QUESTIONS. 

"WTiat  do  the  duties  of  the  merchant  relate  to  ?  "What  must  he  do  ? 
What  does  a  failure  subject  him  to  ?  "What  must  he  pay  ?  "What  besides 
freight  ?  "What  is  meant  by  general  average  f  "What  is  the  simplest  case 
presented  ?  What  is  the  equitable  rule  arising  from  it  ?  To  what  cases 
is  the  rule  requiring  general  average  limited  ?  What  is  it  that  brings  a 
case  within  the  principle  ?  Are  the  wages  and  provisions  of  the  crew, 
while  refitting,  subject  to  average  ?  Are  they  so  subject  while  captured 
and  detained  for  adjudication  ?  What  the  rule  while  detained  for  an 
embargo?  How  is  it  with  the  cost  of  repairs?  When  do  they,  and 
when  do  they  not,  come  within  the  principle  ?  What  does  the  principle 
embrace  ?  What  the  rule,  where  a  part  of  the  cargo  is  voluntarily  given 
up  to  a  pirate  or  enemy  as  a  ransom  ?  What,  when  masts,  cables,  «&c., 
are  cut  away  to  save  the  vessel  ?  What,  when  destroyed  by  carrying  too 
much  canvass?  Does  the  principle  extend  beyond  loss  or  injury  to  sub- 
ject-matter?   And  embraces  what  besides  ?    What  rule  where  the  ship 


222  WHAT   IS    SALVAGE   AND   WUO   ARE   SALVOES. 

is  voluntarily  stranded  without  Ijcing  lost?*  "What,  -where  stranded  and 
lost  ?  What  must  not  the  loss  be  occasioned  by  ?  What,  if  it  proceed 
from  sudden  impulse  excluding  judgment  and  will?  When  should  con- 
sultation he  iirst  had?  What  is  necessary  ?  By  what  is  this  evidenced, 
and  required  to  be  so  ?  What  species  of  property  first  abandoned  ?  How 
must  the  approach  be  to  articles  of  value  ?  What  goods  are  liable  to 
contribution  ?  What  is  the  ground  of  contribution  ?  When  do  bullion 
and  jew^cls  contribute  ?  What  kind  of  articles  are  subject  to  contribu- 
tion ?  What  limitation  is  there  ?  Do  instruments  of  defence  and  pro- 
visions contribute  ?  How,  if  sacrificed  for  the  common  safety  ?  To 
what  do  seamen's  Avages  contribute  ?  What  is  the  rule  where  a  part  of 
the  cargo  is  sold  for  the  necessities  of  the  ship  ?  And  how  if  ship  be 
afterwards  lost?  What  proceedings  in  adjusting  the  general  average? 
What  is  included  in  the  statement  of  the  property  that  is  to  contribute  ? 
What  other  account  is  necessary  ?  What  valuation  is  to  be  adopted  ? 
By  whom  is  the  average  adjusted,  and  by  whom  paid  ?  What  valuation 
is  attached  to  ship  ?    What  is  the  duty  of  the  master  ?    And  liis  right  ? 

PART  vn. 

SALVAGE. 

§  426.  Anotlier  peculiarity  which  has  grown  out  of 
commercial  pursuits,  is  the  law  of  salvage.  This  term  ex- 
presses the  compensation  to  be  made  by  the  ship  owner  or 
merchant,  to  other  persons  by  whose  assistance  the  ship  or 
its  lading  may  be  saved  from  impending  peril,  or  recovered 
after  actual  loss.  This  applies  equally  to  rescues,  whether 
they  be  of  ship  or  cargo  from  the  perils  of  the  sea,  or  from 
the  hands  of  enemies.  In  cases  of  goods  derelict  at  sea,  or 
captured,  the  ship  or  cargo,  one  or  both  must  be  in  immi- 
nent peril.  The  salvors,  a  class  of  men  often  devoted  to 
that  kind  of  business,  volunteer  their  efforts  to  rescue  the 
property.  If  unsuccessful,  they  receive  no  compensation, 
as  the  rendition  of  their  service  is  without  request,  and  hence 
imposes  on  no  one  the  obligation  of  payment.  But  if  suc- 
cessful, the  policy  of  the  law  permits  him  to  look  for  his 
indemnity  to  the  property  rescued,  or  to  its  owners  who  re- 
ceive the  benefit,  and  who  would  have  sustained  the  loss  if 
their  efforts  had  not  intervened  to  prevent  it.     When  the 


AMOUNT  OF   SALVAGE,   AND   WHO  MAY   BE  SALVOES.     223 

salvage  occurs  of  goods  wrecked,  that  is  thrown  hj  the  sea 
upon  the  land,  the  rights  of  the  salvors  and  the  proceedings 
in  the  State  of  New  York,  and  in  some  of  the  other  States, 
are  regulated  by  statute  ;  but  when  the  peril  occurs  at  sea, 
and  the  goods  are  what  is  termed  derelict^  it  is  then  a  matter 
of  admii-alty  or  maritime  jurisdiction,  and  is  subject  to 
maritime  law.  Tliat  jurisdiction,  however,  embraces  all 
rivers  navigable  from  the  ocean,  as  far  as  then*  waters  are 
affected  by  the  tidal  movements.  And  hence,  where  a  part 
of  the  contents  of  a  canal  boat  sunk  in  the  channel  of  the 
Hudson  Eiver,  where  the  tide  ebbed  and  flowed,  was  res- 
cued by  salvors  who  claimed  a  lien  upon  it  for  their  services, 
it  was  held  that  this  came  under  the  general  principle  of 
goods  derelict  at  sea,  and  that  the  salvor  had  a  lien  for  his 
salvage.    Baker  v.  Hoag^  3  Seld.  555. 

§  427.  Tlie  amount  of  the  salvage,  where  it  is  not  regu- 
lated by  statute,  is  left  to  the  discretion  of  the  Court  of 
Admiralty  under  the  circumstances  of  the  case.  Tlie 
amount  varies  according  to  the  labor  and  peril  incurred  by 
the  salvors ;  their  meritorious  conduct ;  the  value  of  the 
ship  and  cargo,  and  the  peril  from  which  they  were  rescued. 
The  most  usual  rate  of  allowance  has  been  one-third  of  the 
property ;  but  sometimes  one-fourth,  and  then  again  one- 
half  the  gross  or  net  proceeds  of  the  projierty  saved  have 
been  adjudged  to  the  salvor.  The  object  is  not  only  to 
reward  meritorious  service,  but  also  to  incite  to  strong 
efforts  in  such  cases. 

§  428.  In  regard  to  the  persons  who  are  entitled  to  be- 
come salvors :  the  rule  of  exclusion  is  that  so  long  as  a 
person,  whether  seaman,  officer,  pilot,  or  other  person,  is 
acting  within  the  line  of  his  duty  in  the  given  case,  he  can 
have  no  valid  claim  for  salvage  remuneration.  lie  is  then 
hired  and  paid  for  liis  services,  and  tlicrc  is  no  consideration 
for  any  thing  extra  he  can  render.  A  salvor,  therefore,  is  a 
person,  who,  witliout  any  particular  relation  to  the  ship  or 
cargo  saved,  tenders  useful  service,  and  renders  it  without 


224        WHO  MAY  AND  MAY  NOT  BE  SALVOES. 

any  pre-existing  contract  making  sucli  service  a  duty.  This 
would  exclude  the  master,  pilot,  passengers,  seamen,  and  all 
Buch,  whose  services  rendered  may  be  fairly  considered  as 
due  to  the  service  in  which  they  are  employed.  But  a  pas- 
senger, or  an  officer,  acting  as  such,  for  extraordinary  exer- 
tions beyond  what  his  duty  demands,  may  become  entitled 
to  salvage.  But  such  an  abandonment  of  the  ship  as  will 
discharge  the  seaman  from  his  contract,  leaves  him  at  liberty 
to  proffer  his  services  as  salvor,  and  any  contribution  he 
may  subsequently  render  to  the  preservation  of  the  ship  or 
cargo,  will  entitle  him  to  salvage.  And  even  though  such 
contract  be  not  dissolved  by  shipwreck,  yet  for  the  rendition 
of  peculiar  services  in  preserving  the  wreck  and  fragments 
of  the  ship  and  cargo,  which  are  without  the  line  of  his 
regular  employment,  he  may  be  entitled  to  salvage  And 
as  the  duty  of  the  seaman  ceases  by  capture,  any  services 
they  may  subsequently  and  successfully  render  to  recover 
the  captured  ship,  will  entitle  them  to  salvage. 

QUESTIONS. 

"WTiat  is  meant  by  salvage  ?  What  does  it  apply  to  ?  Wiio  is  tlie 
salvor  ?  What  is  the  rule,  in  case  he  is  nnsuccessful  ?  How  if  success- 
ful ?  To  whom  may  he  look  for  remuneration  ?  When  is  the  wreck  or 
loss,  a  matter  of  State,  and  when  of  Admiralty  jurisdiction?  What 
does  the  Admiralty  jurisdiction  embrace  ?  How  far  does  it  extend  upon 
inland  waters  ?  How  is  the  amount  of  salvage  regulated  ?  Upon  what 
principle  is  it  made  to  vary  ?  What  is  the  usual  rate  of  allowance  ? 
What  the  limit  of  its  variation  ?  What  the  object  ?  Who  are  excluded 
from  being  salvors  ?  Who  must  a  salvor  be  ?  Who  does  this  exclude  ? 
Under  what  conditions  may  a  passenger  or  officer  become  a  salvor  ? 
What  effect  in  regard  to  salvage  does  abandonment  of  ship,  and  dis- 
charge of  seamen  have  ?  How,  suppose  snch  contract  be  not  discharged 
by  shipwreck,  and  the  services  rendered  be  peculiar  ?  How  as  to  ser- 
vices rendered  in  recapturing  the  vessel  ? 


MODES  OF  DISSOLVING  CONTRACT  OF  AFFREIGHTMENT.       225 

PART  YIII. 
DlSaOLrTION  OF  THE   COKTEACT  OF  AFFEEIGnTMENT. 

§  429.  The  peculiarities  wliicli  seem  incidental  to  thia 
contract  continue  throughout,  and  constitute  some  of  the 
modes  of  its  termination.  Its  dissolution  before  completion, 
may  occur,  not  onlj  by  the  act  of  the  parties,  but  also  by 
the  act  of  the  law  under  the  following  circumstance?. 

1.  Sliould  the  voyage  become  unlawful ;  or 

2.  Of  impossible  performance  ;  or 

3.  Broken  up,  either  before  or  after  :"ts  actual  commence- 
ment ;  and  this  may  occur  by  war,  or  the  interdiction  of 
commerce  with  the  place  of  destination.  And  it  is  imma- 
terial in  this  latter  respect  whether  the  interdiction  be  com- 
plete, preventing  the  entry  of  the  vessel ;  or  partial,  relating 
only  to  the  merchandise  on  board,  and  preventing  it  from 
being  landed.  The  blockade  of  the  port  of  destination, 
thus  preventing  the  landing,  discharge,  and  taking  in  the 
return  cargo,  is  sufficient  to  dissolve  the  contract.  So,  also, 
if  the  shipper  cannot  demand  the  delivery  of  the  goods,  by 
reason  of  their  being  exposed  to  seizure  by  landing.  So,  if 
thero  be  a  capture  on  the  passage,  thus  breaking  wp  the 
voyage  so  as  to  cause  a  complete  defeasance  of  the  under- 
taking, although  there  may  be  a  subsequent  recapture. 

§  430.  But  a  mere  temporary  impediment  in  the  way  of 
the  voyage,  such  as  an  embargo,  although  for  an  indefinite 
period  of  time,  operating  merely  as  a  temporary  restraint, 
does  not  work  a  dissolution  of  the  contract.  A  blockade 
of  the  port  of  departure  has  also  the  same  effect,  merely 
suspending,  not  dissolving,  the  contract.  To  have  the  latter 
effect,  the  voyage  must  be  broken  up,  or  the  completion  of 
it  become  unlawful.  Even  capture  docs  not,  of  itself, 
destroy  the  contract.  It  suspends  it  during  the  prize  pro- 
ceedings, and  it  re-attaches  in  case  of  recapture.  In  all 
such  cases,  the  parties  must  wait  until  those  obstacles  which 
15 


226  DEFINITION   OF   BAILMENT. 

merely  retard  its  execution,  are  removed.  If  the  cargo  can 
endure  delay,  iiutliing  but  occurrences  wliicli  absolutely 
prevent  the  execution  of  the  contract,  will  discharge  it. 

QUESTIONS. 

What  are  tlie  modes  by  which  the  contract  of  affreightment,  hefore 
its  completion,  may  be  terminated  by  act  of  the  law?  Is  it  necessary 
that  interdiction  be  complete?  May  it  be  sufficient  if  partial?  And 
applied  to  what,  and  how  ?  When  is  a  blockade,  and  of  what,  sufficient? 
When  is  inability  to  demand  delivery  of  goods,  and  for  what  reason, 
sufficient  ?  What  effect  has  a  capture  on  their  passage  ?  What  effect, 
in  this  respect,  has  a  mere  temporary  impediment  to  the  voyage  ?  What 
illustration  of  it  ?  What  effect  has  blockade  of  port  of  departure  ? 
What  necessary  to  work  dissolution  of  the  contract  ?  What  effect,  in 
this  respect,  has  capture  ?  What  must  parties  do  in  case  of  obstacles  ? 
What  sort  of  occurrences  are  required  to  discharge  the  contract  ? 


CHAPTER  II. 

CONTRACT   OF    BAILMENT. 
PART   I. 

DEFINITION.    KINDS.     NEGLECTS. 

§  431.  A  bailment  is  a  delivery  of  goods  in  trust  upon 
a  contract,  express  or  implied,  that  the  trust  shall  be  faith- 
fully executed  on  the  part  of  the  bailee.  Tlie  party  deliver- 
ing is  the  bailor ;  the  party  undertaking  the  trust,  the 
bailee.  The  subject-matter — the  goods  delivered,  and  in 
relation  to  which  the  trust  is  undertaken,  are  either  personal 
property,  or  the  services  of  those  who  are  hired.  It  will  be 
perceived,  the  definition  states  no  consideration  to  support 
the  undertaking  to  perform  the  trust.  This  is  rendered 
uimecessary  by  means  of  the  delivery.  That  act  on  the  part 
of  the  bailor,  and  the  acceptance  charged  with  the  trust  to 
be  performed  on  the  part  of  the  bailee,  is  held  to  constitute 
a  sufficient  consideration,  and  thus  give  the  bailor  a  legal 
right  to  require  the  execution  of  the  trust. 


DIFFERENCE   BETAVEEX    SALE   AND    BAILilENT.  227 

§  432.  The  point  around  -u-liich  gatliers  the  most  interest, 
which  is  the  most  important  for  Inisiness  men  to  understand, 
and  which  has  created  no  small  difficulty  in  the  courts,  is  to 
discriminate  clearly,  and  distinguish  the  exact  difi'erence 
between  a  bailment  and  a  sale,  so  as  to  be  at  no  loss  in  de- 
tennining  which  belongs  to  one,  and  which  to  the  other. 

A  miller  gives  an  agreement  to  a  merchant  or  faraier, 
containing  the  following  language  : 

"  I  agree  to  take  of  tlic  plaintiffs  all  the  wheat  they  have 
at  their  store-house  of  a  good  merchantable  quality,  and  to 
give  them  one  barrel  of  first-rate,  superfine  flour,  for  every 
four  and  f  f  bushels  of  wheat." 

Another  gives  an  agreement  in  the  following  language : 

"  We,  the  plaintiffs,  agree  to  deliver  to  the  defendant,  a 
miller,  a  quantity  of  good,  merchantable  wheat,  be  the  same 
more  or  less,  to  be  manufactured  into  flour.  For  every  four 
bushels  and  15  pounds  of  wheat,  is  to  be  delivered  one 
hundred  and  ninety-six  pounds  of  superfine  flour."  The 
rights  and  liabilities  of  the  parties  arc  entirely  different 
under  these  two  agreements.  The  first  is  a  contract  of  sale, 
in  which  so  much  wheat  is  agreed  to  be  sold  for  so  much 
flour.  The  title  to  tiie  wheat  passes  on  delivery,  and  if  the 
mill  containing  the  wheat  were  destroyed  by  fire,  the  loss 
would  fall  upon  the  miller.  lie  must  still  perform  his  con- 
tract to  furnish  the  flour. 

Tlie  last  is  a  contract  of  bailment  in  which  the  wheat  is 
delivered  for  a  given  purpose,  viz. :  to  be  manufactured  into 
flour.  The  title  to  the  wheat  does  not  pass  by  delivery,  but 
remains  in  tlie  bailor.  In  case  of  its  accidental  destruction, 
without  the  fault  of  the  bailee,  the  loss  would  fall  entirely 
on  the  bailor,  and  the  bailee  would  be  absolved  from  his 
trust.  The  line  of  distinction  running  througli  the  cases 
will  be  found  to  be  this.  Where  the  thing  to  be  delivered 
is  capal)le  of  identification  throughout,  or  where  its  proceeds, 
or  the  forms  into  which  it  may  be  changed,  are  to  be  kept 
distinct,  and  to  be  treated  as  the  thing  itself,  it  is  a  case  of 


228  KINDS   OF   BAILMENT   AND   NEGLECT. 

bailment.  Otherwise  it  is  one  of  sale.  Illustrations.  Ncyr^ 
ton  V.  Woodruff,  2  Comst.  153.  Mallory  v.  Willis,  4  Comst. 
Y6.  Wachworth  v.  Alcott,  2  Seld.  C4.  Foster  v.  Pettihone, 
3  /&^c?.  433.  A  different  conclusion  has  been  arrived  at  in 
Virginia  in  the  recent  case  of  Slaughter  v.  Green,  decided 
in  tlie  Com-t  of  Appeals  of  that  State,  1  Band.  3,  in  which 
wheat  had  been  delivered  at  a  mill  to  be  ground,  on  an 
agreement  that  the  miller  should  return  to  the  farmer  a 
given  quantity  of  fiourfm'  so  many  hushels  of  wheat.  The 
wheat  being  consumed  by  a  fire,  it  was  held  a  case  of  hail- 
ment,  and  the  miller  not  accountable  for  the  loss.  This  is 
in  direct  conflict  with  the  New  York  decisions,  and  may, 
perhaps,  have  the  effect  to  leave  the  question  an  open  one 
in  general  jurisprudence. 

§  433.  There  are  five  different  kinds  of  bailment.  The 
deposit,  the  mandate,  the  loan  for.  iise,  the  pledge,  and  the 
hiring,  which  is  of  several  different  kinds.  All  these  sev- 
eral kinds,  however,  are  brought  under  the  dominion  of  three 
different  principles.  , 

1.  Those  in  which  the  execution  of  the  trust  is  for  the 
exclusive  benefit  of  the  bailor,  or  of  some  person  other  than 
the  bailee. 

2.  "Where  that  execution  is  exclusively  for  the  benefit  of 
the  bailee. 

3.  "Where  such  execution  is  for  the  benefit  of  both  par- 
ties ;  or  of  one  of  them,  and  a  third  party. 

§  434.  There  are  three  diflerent  kinds  of  neglect,  for 
which  the  different  kinds  of  bailees  may  render  themselves 
liable. 

1.  Ordinary  neglect,  which  is  defined  to  be  the  omission 
of  that  care,  which  every  man  of  common  prudence,  and 
capable  of  governing^  a  family,  takes  of  his  own  concerns. 

2.  Gross  neglect,  which  is  the  want  of  that  care  which 
every  man  of  common  sense,  how  inattentive  soever,  takes 
of  his  own  property. 

3.  Slight  neglect,  which  is  the  omission  of  that  diligence 


OBLIGATION    OF   TUE    DEPOSITARY.  2 2 'J 

Trhicli  very  circumspect  and  tliouglitful  persons  use  in  secur- 
ing their  own  goods  and  cliattels. 

QUESTIONS. 
"What  is  bailment  ?  "Who  are  parties,  and  what  called  ?  TVhat  is  the 
Eubject-matter,  or  thing  bailed  ?  "What  stands  as  the  equivalent  for  the 
consideration  ?  What  is  a  form  of  contract  creating  a  sale  ?  What 
effect  upon  the  rights  of  the  parties,  in  case  of  loss  ?  "What  form  of 
contract  creating  a  bailment  ?  What  effect  upon  rights  of  parties  in  case 
of  loss  ?  What  is  the  criterion  distinguishing  a  bailment  from  a  sale  ? 
WTiat  are  the  different  kinds  of  bailment  ?  What  three  different  princi- 
ples hold  dominion  over  these  different  kinds?  How  many  different 
kinds  of  neglect  are  there  ?    Specify  and  define  each  one. 

PART    II. 

DEPOSITS. 

§  435.  A  deposit  is  a  mere  naked  bailment  of  goods  to 
be  kept  for  the  bailor,  without  reward,  and  to  be  returned 
when  so  required.  We  have  here  two  parties — depositor,  or 
party  depositing,  and  depositary,  or  party  taking  charge  of 
the  deposit.  It  must  be  a  trust  volimtarily  undertaken,  and 
without  recompense.  Where  the  bailee  is  ignorant  that  he 
is  a  depositary,  he  is  not  answerable. 

§  436.  The  depositary  assumes  the  obligation  of  keeping 
the  deposit  with  reasonable  care.  Tliis  binds  him  on  1^^  to 
slight  diligence,  and  renders  him  answerable  only  for  gross 
neglect.  As  both  diligence  and  negligence  have  many  gra- 
dations, with  no  clearly  defined  margins,  there  is  always  a 
difficulty  in  any  case  that  presents  itself,  in  fixing  the  limit 
of  liability.  This  limit  is  not  a  fixed  one,  but  varies  with 
the  nature,  value,  and  quality  of  the  deposit ;  the  circum- 
stances under  which  it  is  made;  and  sometimes  upon  the 
character,  confidence,  and  particular  dealings  of  the  parties. 
It  has  been  said  that  the  depositary  must  take  the  same  care 
of  the  goods  deposited  as  he  takes  of  his  o"wn.  But  this,  if 
adopted  as  a  rule,  would  in  each  case  necessitate  the  inquiry 
what  care  the  depositary  was  in  the  habit  of  taking  of  his 


230  TO  KEEP,  AND  TO  KEEP  SAFELY. 

own  property.  The  slight  diligence  to  which  the  depositaiy 
is  held,  means  that  degree  of  it  which  persons  of  less  than 
common  prudence,  or  indeed,  of  any  prudence  at  all,  take 
of  their  own  concerns. 

§  437.  Much  doubt  relating  to  the  nature  and  effect  of 
acceptance  was  created,  and  long  remained,  arising  out  of 
an  inference  drawn  by  Lord  Coke  in  Co.  Litt.  89  a.  h.,  from 
Southcoie's  case,  Cro.  Elis.  815  ;  viz. :  that  there  was  no  dif- 
ference between  a  general  acceptance  to  Iceep,  and  a  special 
acceptance  to  heep  safely,  and  hence  that  if  a  depositary  de- 
sired to  be  exonerated  from  loss  by  theft,  he  must  make  a 
special  acceptance  to  keep  the  goods  as  he  would  his  own. 
This  doctrine  would  throw  upon  the  general  depositary  a  far 
greater  amount  of  liability  than  the  law  devolves  upon  him. 
Inasmuch  as  the  delivery  and  acceptance  constitute  the  con- 
sideration upon  which  the  trust  is  enforceable,  and  there  can 
be  no  delivery  without  an  acceptance,  as  the  trust  must  be 
voluntarily  undertaken,  it  is  clearly  the  right  of  the  deposi- 
tary to  make  such  a  special  acceptance  as  he  may  deem 
proper,  and  when  so  made,  it  qualifies  his  liability.  It  is, 
therefore,  in  the  power  of  the  depositary,  if  he  accept  the 
trust  at  all,  to  accept  it  subject  to  just  the  grade  or  degree 
of  liability  he  may  choose.  The  inference  drawn  by  Lord 
Coke,  was  distinctly  overruled  in  Coggs  v.  Bernard,  2  Ld. 
Raymond,  909.  The  acceptance  may  be  subject  to  a  par- 
ticular place  of  deposit,  as  on  the  deck  of  a  ship,  and  when 
the  de230sitor  intrusts  his  goods,  knowing  how  and  where  the 
depositary  will  keep  them,  he  must  be  held  as  assenting  to 
such  a  mode  of  keeping  them  and  hence  cannot  complain 
of  their  loss  by  the  ordinary  perils  to  which  they  are  there- 
by subjected.  Knoioles  v.  A.  &  St.  L.  Railroad  Co.  38 
Maine,  55.  But  a  general  acceptance  subjects  only  to  the 
lowest  degree  of  liability.  It  impliedly  stipulates  that  some 
degree  of  care  shall  be  taken  of  the  deposit,  but  it  approxi- 
mates gross  negligence,  on  which  the  line  of  liability  runs, 
so  very  near  to  bad  faith  and  actual  fraud,  that  there  seems 


USE  OP  DEPOSIT.  2<5l 

to  be  but  little  distiiiction  between  tliem.  Foster  v.  The 
Essex  BanJc^  17  Mass.  479.  The  degree  of  care  and  diligence 
which  ouo-ht  to  be  required  accordmg  to  this  case,  is  to  be 
measured  by  the  carefulness  which  the  depositary  uses  to- 
wards his  own  property  of  a  similar  kind.  Although  the  fact 
that  this  same  degree  of  care  was  taken  by  the  depositary  is 
always  admissible  in  evidence,  yet,  if  it  be  fully  proven,  it  is 
not  necessarily  a  conclusive  answer,  as  it  is  competent  not- 
withstanding to  show  that  the  loss  was  owing  to  gross  negli- 
gence. Doorman  v.  Jenkins.,  2  Ad.  (&  El.  256.  Li  ordinary 
cases,  however,  that  proof  would  be  sufficient ;  for  as  gross 
neghgence  implies  little  if  any  thing  short  of  bad  faith,  the 
fact  that  he  keeps  the  goods  deposited  with  the  same  care 
that  he  does  his  own,  is  at  least  evidence  of  his  honesty.  If 
his  character  was  dissolute,  careless,  and  reckless,  the  depo- 
sitor should  not  have  deposited  with  him  his  goods,  without 
some  compensation,  which  would  have  enabled  him  to  have 
exacted  a  higher  degree  of  care  and  diligence. 

§  438.  A  question  will  often  arise,  as  to  how  far  the 
depositary  is  at  liberty  to  use  the  thing  deposited  ?  And 
the  rule  here  is  well  ex]3ressed  in  the  French  code,  that  the 
depositary  has  no  right  to  use  the  deposit  without  the  express 
or  presumed  permission  of  the  depositor.  The  express  per- 
mission is,  of  course,  always  sufficient.  The  permission  may 
be  'presumed  whenever  the  use  would  obviously  benefit  the 
thing  itself,  without  exposing  it  to  extraordinary  perils.  A 
horse,  for  instance,  may  be  exercised,  and  a  milch  cow 
milked,  to  preserve  the  health  of  each.  But  jewels  deposited 
should  not  be  worn,  for  although  the  use  might  not  injure, 
yet  it  would  subject  them  to  greater  risk  of  loss. 

§  439.  Another  question  relates  to  the  extent  or  amount 
of  interest  or  property  which  the  depositor  should  have  in 
the  thing  deposited  ;  and  also  what  special  property,  if  any, 
passes  to  the  depositary  in  virtue  of  the  deposit.  In  regard 
to  the  first,  it  is  licld  that  no  absolute  title  is  necessary  ;  that 
a  mere  special  property  is  all  that  is  essential ;  and  even 


232      OBLIGATION  TO  EETUKN,  AND  WHAT  WILL  EXCUSE  IT. 

that  a  bare  possession  of  the  personal  chattel  is  sufficient  to 
enable  him  to  dej^oslt  it,  and  to  give  him  the  ordinary  rights 
against  the  depositary.  As  to  the  second,  although  the 
general  doctrine  has  been  asserted  that  all  bailees  have  a 
special  property  in  the  thing  bailed,  yet,  as  now  understood, 
the  depositary  has  no  special  property  in  the  deposit,  and 
yet,  in  virtue  of  his  possession,  and  of  his  liabilities  over  to 
the  owner,  he  has  undoubtedly  a  right  of  action  against  a 
mere  wrong  doer  who  deprives  him  of  that  possession.  As 
his  possession  is  a  rightful  one,  the  law  gives  him  adequate 
power  to  protect  it,  and  also  sufficient  to  enable  him  to 
answer  to  the  depositor. 

§  440.  Another  obligation  devolved  upon  the  depositary 
is  to  return  the  deposit  whenever  required  to  do  so,  Tliis 
return  must  be  of  the  individual  thing  deposited,  and  in  the 
same  condition  in  which  it  was  received.  It  is  not  limited 
to  the  thing  itself,  but  embraces  also  all  increase  or  profits 
which  may  have  been  realized  from  it,  K  the  deposit  is  of 
a  perishable  nature,  it  may  be  sold,  and  the  proceeds  re- 
turned in  its  place.  In  either  one  of  the  following  instances, 
a  return  Avill  be  excused. 

1.  "Where  it  is  destroyed  by  an  accident. 

2.  "Where  it  perishes  by  its  own  inherent  defects. 

3.  "Where  its  destruction  is  owing  to  its  own  perishable 
quality. 

4.  "Where  the  loss  is  owing  to  the  slight,  or  even  ordi- 
nary neglect  of  the  depositary. 

§  441.  A  question  has  arisen  whether  the  innocent  bailee 
is  responsible  to  any  other  person  than  to  his  bailor  or  his 
personal  representative.  He  stands  upon  the  strength  of 
his  bailor's  title,  and  has  engaged  to  make  restitution  to 
him.  Hence  it  was  once  supposed  that  to  him  he  was  only 
liable.  But  it  is  now  considered  that  he  is  liable  to  the 
true  owner  ;  that  he  can  never  be  in  a  better  situation  than 
his  bailor  ;  and  that  the  owner  ought  always  to  be  entitled 
to  reclaim  his  property  wherever  he  can  find  it.    The  de- 


OBLIGATION   IN  CASE  OF  JOINT  BAILMENT.  233 

positary,  however,  is  charged  -^-ith  no  duty  in  the  ascertain- 
ment of  title,  and  hence  if  he  deliver  to  the  bailor  in  good 
faith,  not  knowing  the  claim  of  the  true  owner,  he  cannot 
be  made  liable  to  the  latter.  Nelson  v.  Jonson^  11  Ala. 
216.  !N"o  liability  attaches  to  the  depositary  until  he  is 
guilty  of  some  default,  some  conversion,  or  some  act  of 
gross  negligence  productive  of  loss  ;  and  unless  the  deposi- 
tor or  owner  relies  upon  j^i'oving  some  such,  he  should  not 
bring  an  action  without  first  demanding  the  property  and 
obtaining  a  refusal  to  surrender  it,  which  is  always  held 
equivalent  to  a  conversion. 

§  442.  A  difficulty  may  arise  as  to  whom  the  delivery  is 
to  be  made  where  there  has  been  a  joint  bailment.  In  such 
a  case,  the  delivery  must  be  made  to  all  the  bailors  together, 
or  to  one  with  the  consent  of  all.  When  there  are  joint 
depositaries,  each  is  liable  for  the  restitution  of  the  whole 
deposit.  The  place  of  restoration,  if  not  agreed  upon,  should 
be  where  it  is  found,  or  where  it  ought  to  be  kept.  The 
demand  may  be  made  wherever  the  depositary  may  happen 
to  be,  but  tlie  offer  to  deliver  at  the  place  where  the  property 
is,  or  at  his  dwelling-house,  or  place  of  business,  will  be 
sufficient. 

§  443.  Although  it  is  of  the  very  essence  of  this  species 
of  bailment  that  no  compensation  shall  be  allowed  the 
bailee,  yet  he  is  entitled  to  reimbursement  for  all  necessary 
expenses,  and  for  all  such  expenditures  as  he  may  have  been 
called  upon  to  make,  which  were  necessary  to  the  preserva- 
tion of  the  deposit.  The  request  to  assume  the  duties  inci- 
dent to  the  bailment,  is  a  sufficient  authority  on  the  part 
of  the  bailor  to  expend  such  moneys  out  of  wliich  a  sufficient 
promise  can  be  extracted  for  their  reimbursement. 

QUESTIONS. 

"What  is  a  deposit  ?  Who  the  parties  ?  ITow  must  the  trust  be  ? 
What  ohligation  docs  the  depositary  assume  ?  What  docs  this  bind  him 
to?  What  render  liim  answerable  for?  What  difficulty  is  there  iu 
fixing  tlic  limit  of  liability  ?    How  is  this  limit  made  to  vary  ?    What  is 


234:  MANDATE   AND  6UBJECT-MATTEE   OF   IT. 

objcctioiifihlo  in  the  rule  that  the  depositary  must  take  tijc  same  care  of 
the  goods  dei)0.sited  as  of  liis  own?  What  docs  slight  diligence  mean? 
Is  tlio  depositary  at  liberty  to  make  any  special  acceptance  lie  may 
choose  ?  What  is  the  effect  of  a  special  acceptance  ?  What,  if  it  bo 
subject  to  a  particular  place  of  deposit  ?  What  does  a  general  accept- 
ance subject  to  ?  What  does  it  impliedly  stipulate  ?  To  what  does  it 
nearly  approximate  gross  negligence  ?  Is  the  fact  that  similar  care  has 
been  exercised  as  of  one's  own  property  admissible  in  evidence  ?  Can 
there  be  a  recovery  notwithstanding  ?  What  is  such  fact  evidence  of? 
If  character  is  dissolute,  careless,  and  reckless,  who  sustains  loss,  and 
Avho  should  sustain  it  ?  What  is  the  rule  as  to  depositary's  using  the 
things  deposited?  When  may  the  permission  be  presumed?  What 
illustrations?  Must  depositor  have  absolute  title  in  thing  deposited? 
What  is  essential  to  enable  him  to  deposit  ?  Has  depositary  special 
property  in  deposit  ?  What  are  his  rights  as  against  wrong  doers,  and 
on  what  founded  ?  What  is  another  obligation  devolved  on  the  de- 
positary ?  What  must  the  return  be  ?  And  in  what  condition  ?  What 
must  it  embrace  ?  What  if  the  deposit  be  of  a  perishable  nature  ?  In 
what  instances  may  a  return  be  excused  ?  Is  innocent  bailee  responsible 
to  any  other  than  his  bailor?  To  what  other  may  he  be  responsible? 
On  what  principle  ?  Suppose  he  delivers  deposit  in  good  faith  to  bailee 
when  it  belongs  to  another  ?  When  docs  liability  first  attach  to  deposi- 
tary ?  What  should  depositor  or  owner  do  before  bringing  suit  ?  To 
whom  is  delivery  made  in  case  of  joint  bailment  ?  How  when  there  are 
joint  depositaries?  What  is  the  place  of  restoration?  Is  depositary 
entitled  to  be  reimbursed  for  expenses  and  expenditures?  On  what 
prhiciple  ? 

PART  III. 

MANDATE. 

§  444.  A  mandate  is  when  one  undertakes,  without  re- 
compense, to  do  some  act  for  another,  in  respect  to  the  thmg 
bailed.  The  person  employing  is  called  the  mandator  ;  the 
person  employed  the  mandatary.  Tliere  are  three  things 
necessary  to  create  a  mandate : 

1.  The  subject-matter  of  the  contract,  or  some  act  or 
business  to  be  done  in  relation  to  it.  And  the  thing  to  be 
done — the  labor  and  services — are  here  regarded  as  the 
principal  object  of  the  parties,  while  the  thing  in  or  about 
which  they  are  to  be  rendered  is  merely  accessorial. 


NON-FEASANCE    AND   MIS-FEASANCE.  235 

2.  "Whatever  is  stipulated  to  be  done  must  be  gratuitous. 

3.  Tlie  parties  must  voluntarily  intend  to  enter  into  tho 
contract. 

Tlie  act  to  be  done  must  have  some  qualities,  as  : 

1.  It  must  be  something  to  be  done  in  the  future. 

2.  It  must  have  respect  to  something  that  is  certain, 
otherwise  no  contract  can  arise. 

3.  It  must  be  of  such  a  nature  that  it  may  be  deemed 
the  mandator's  act  through  the  mandatary's  insti-umen- 
tality. 

4.  It  must  be  of  a  nature  capable  of  being  done,  and 
not  an  impossibility. 

§  4:4:5.  A  mandatary,  no  more  than  a  depositary,  can  be 
said  to  have  any  special  property  in  the  thing,  any  further 
than  his  expenses  incurred  about  it  may  give  him  a  lien. 
He  has  his  possessory  title,  and  that,  together  with  his  lia- 
bility over,  enables  him  to  bring  an  action  for  any  tort  or 
wrong  done  to  the  thing  vrhile  in  his  possession. 

§  44G.  There  has  been  a  difference  of  opinion  as  to  the 
legal  validity  of  a  mandate  contract,  that  is,  of  a  contract  to 
assume  the  trusts  of  a  mandatary.  Sir.  William  Jones, 
following  the  civil  law,  insists  that  damages  can  be  recovered 
for  breaking  such  a  contract,  while  by  the  principles  of  the 
common  law,  there  being  no  consideration,  there  is  no  bind- 
ing contract  between  the  i)arties.  In  other  words  the  mere 
non-feasance — the  neglect  to  do  that  which  a  party,  without 
any  consideration,  undertakes,  subjects  to  no  legal  lia- 
bility. Of  this  the  common  law  leaves  no  room  for  doubt. 
But  where  tlie  thing  is  delivered  to  the  mandatary,  who  ac- 
(;cpts  it  under  the  trusts  imposed,  and  enters  upon  the  per- 
formance of  what  he  has  undertaken,  that  creates  a  valid  and 
binding  contract  which  the  mandatary  is  bound  properly  to 
perform.  Here  is  a  delivery  and  receipt  fur  a  specific  pur- 
pose ;  here  are  elements  of  trust  and  confidence ;  here  are 
acts  upon  one  side  in  consideration  of  ujidertakings  upon  the 
other  \  and  in  case  these  arc  not  performed,  there  occurs  a 


236  NON-FEASANCE    AND    MIS-FEASANCE. 

legal  liability.  In  other  words,  the  inis-fcasanoe — the  neg- 
ligcnt  performance  of  that  which  is  undertaken  by  which 
damage  occurs — subjects  to  liability.  Illustration  of  non- 
feasance. A  and  B  are  joint  owners  of  a  vessel.  A  volun- 
tarily undertakes  to  get  the  vessel  insured,  but  neglects  to 
do  so,  and  the  vessel  is  lost.  An  action  is  brought  by  B 
against  A  to  recover  for  the  loss.  K"o  action  could  be  sus- 
tained. Thome  v.  Deas^  4  John.  84.  Blustration  of  mis- 
feasance.  B  voluntarily  undertakes  to  carry  several  hogs- 
heads of  brandy  from  one  cellar,  and  deposit  them  in  another. 
He  receives  the  hogsheads,  and  enters  upon  his  undertaking ; 
but  performs  it  so  negligently  and  improperly  that  one  of 
the  casks  is  staved  in,  and  the  brandy  lost.  Here,  although 
the  imdertaking  was  gratuitous,  and  B  no  common  carrier, 
yet  the  court  held  that  the  plaintiff  should  recover.  Coggs 
V.  Bernard,  2  Ld.  Raymond,  909.  This  principle  is  very 
widely  applied.  A  surgeon  is  retained,  and  undertakes  the 
performance  of  a  surgical  operation.  A  person  receives  a 
letter  to  deliver,  or  money  to  pay,  or  a  note  to  collect,  and 
by  negligence  omits  to  perform  the  trust.  Tlie  retainer  and 
entering  upon  the  operation  ;  the  delivery  and  receipt  of 
the  letter,  money,  or  note,  creates  a  sufficient  consideration 
to  support  the  contract,  and  is  a  part  execution  of  it,  so  that 
the  party  retained  and  receiving — the  mandatary — although 
acting  gratuitously,  becomes  responsible  for  all  damages  re- 
sulting]: from  negligence. 

§  447.  In  reference  to  the  care  and  diligence  requhed, 
the  mandatary  should  occupy  the  same  position  as  the  de- 
positary. They  both  come  under  the  first  of  the  three 
principles  stated,  viz. :  that  the  bailment  is  exclusively  for 
the  benefit  of  the  bailor,  or  for  some  person  other  than 
the  bailee.  The  mandataiy,  therefore,  like  the  depositary, 
should  be  bound  only  to  slight  diligence,  and  responsible 
only  for  gross  neglect.  But  there  is  this  difi'erence  between 
the  two,  which  necessarily  leads  to  the  creation  of  some 
distinctions  in  the  one  which  do  not  obtain  in  the  other.    The 


LIABILITT   OF    MA]ST)ATAEY.  237 

mere  keeping  of  the  deposit,  demands  no  particular  skill  or 
knowledge,  whereas  the  undertaking  of  the  mandatary, 
Leing  to  do  something,  to  render  some  service  often  in  some 
special  capacity,  may  not  unfrcquently  require  the  possession 
and  exercise  of  such  knowledge  and  skill,  as  is  not  possessed 
by  men  generally.  The  same  general  principle  or  ride, 
has  here  been  proposed,  and  with  tlie  same  result  as  in  the 
case  of  the  depositary,  viz. :  that  where  the  mandatary 
renders  the  same  kind  of  service,  and  bestows  the  samo 
care  and  attention  upon  the  subject-matter  of  the  bailment 
as  upon  his  own  property  of  the  like  kind,  that  is  jprima 
foAiie  sufficient  to  repel  the  presumption  of  gross  negligence. 
§  -i-lS.  Subject  to  the  rule  last  mentioned,  are  some  dis- 
tinctions growing  out  of  the  situation  or  occupation  of  the 
mandatary,  and  the  nature  or  character  of  the  service  to  be 
rendered.  And  the  first  is,  that  a  mandatary  who  acts 
gi'atuitously  in  a  matter  where  neither  his  situation,  occupa- 
tion, or  employment,  implies  any  particular  knowledge,  or 
professional  skill,  is  responsible  only  for  bad  faith,  or  gross 
negligence.  A  merchant  undertakes,  gratuitously,  to  enter 
a  parcel  of  goods  for  another,  together  with  a  parcel  of  his 
own  of  the  same  sort,  at  the  custom-house  for  exportation, 
and  made  an  entry  under  a  wrong  denomination,  in  conse- 
quence of  which,  both  parcels  were  seized.  Ileld  that  he 
was  not  liable  for  the  loss,  as  he  took  the  same  care  of  the 
goods  bailed  as  of  his  own,  and  was  not  of  such  a  profession 
or  employment  as  necessarily  implied  skill  in  what  he  im- 
dertook.  Shields  v.  Blackhurne,  1  H.  Black.  158.  But  if, 
in  this  case,  the  undertaking  had  been  by  some  clerk  or 
employee  in  the  custom-house,  or  some  one  who,  by  his 
employment,  was  led  to  bo  familiar  with  the  manner  of 
doing  business  there,  and  he  had  entered  upon  the  service, 
and  committed  such  a  mistake,  he  would  have  been  liable. 
This  latter  affords  the  illustration  of  another  rule,  viz. :  that 
if  his  situation  or  employment  does  imply  ordinary  skill,  or 
knowledge  adequate  to  the  undertaking,  he  will  be  responsi- 


238  CONVERSION    BY   MANDATARY. 

ble  for  any  losses  or  injuries  resulting  from  the  want  of  the 
exercise  of  such  knowledge  or  skill.  In  a  case  where  the  per- 
son employed  is  known  to  possess  no  particular  knowledge 
or  skill,  and  yet  undertakes  to  do  the  Lest  he  can  under  the 
circumstances,  all  that  can  fairly  be  required  of  him  is  the 
exercise,  to  the  best  of  his  ability,  of  the  judgment,  knowl- 
edge, and  cap|city  he  possesses.  In  all  cases,  the  general 
test  of  liability  is  considered  to  be — whether  the  mandatary 
has  omitted  that  care  and  diligence  which  bailees,  without 
hire,  or  other  mandataries  of  common  prudence,  are  accus- 
tomed to  take  of  property  of  a  like  character  or  descrip- 
tion. 

§  449.  The  depositary  who  refuses  to  deliver  up  the  de- 
posit on  the  demand  of  the  depositor,  and  the  mandatary 
whose^  misuser  of  the  subject-matter  is  such  as  to  afford 
evidence  of  conversion,  both  place  themselves  under  very 
different  liabilities  by  such  acts,  because  their  possession  is 
then  wrongful,  and  they  take  upon  themselves  the  respon- 
sibility for  all  losses.  Thus,  where  a  master  of  a  ship  had 
gratuitously  received  a  box  containing  doubloons  belonging 
to  a  passenger  accidentally  left  behind,  and  who  during  the 
voyage  opened  the  box,  and,  finding  the  contents  valuable, 
took  them  out,  and  lodged  them  in  a  bag  in  his  own  chest 
in  his  cabin,  where  his  own  valuables  were  kept,  and  the 
bag  was  lost ;  it  was  held  that  he  was  responsible  for 
the  loss,  on  the  ground  that  he  had  imposed  upon  himself 
the  duty  of  carefully  guarding  against  all  peiils  to  which 
the  property  was  exposed  in  consequence  of  the  alteration 
of  the  place  of  custody.  Nelson  v.  Macintosh^  1  Starlc.  237. 
This  would  certainly  be  carrying  the  liability  of  the  man- 
datary to  a  very  great  length,  more  especially  if  no  question 
of  good  faith  was  raised  in  the  change  of  custody.  The  safe 
ground  would  be  to  submit  to  the  jnry  the  question  whether 
such  change  was  in  bad  faith,  or  was  intended  as  a  conver- 
sion, and  if  so,  then  to  hold  him  responsible. 

§  450.  The  mandatary  is  also  imder  an  imphed  obliga- 


MODES   OF  DISSOLVING  MANDATE.  239 

tion  to  render,  upon  request,  a  full  account  of  his  proceed- 
ings ;  showing  that  his  trust  has  been  faithfully  performed  ; 
or,  if  badly  performed,  what  reason  or  excuse  there  may  be 
for  it.  He  is  bound,  also,  to  restore  the  thing  itself  with 
all  its  increments,  earnings,  and  gains.  He  is  entitled  to  be 
reimbursed  all  expenses  and  charges  reasonably  incuiTcd  in 
the  execution  of  the  mandate,  and  to  be  indemnified  from 
liability  upon  all  contracts  he  has  entered  into  with  others, 
in  the  proper  discharge  of  the  duties  he  had  undertaken. 

§  451.  There  are  various  modes  of  dissolving  the  contract 
of  mandate.  It  may  be  dissolved  by  either  party  before 
entry  upon  it.  And  after  entry,  as  it  is  based  on  personal 
confidence,  it  is  dissolved  by  the  death  of  the  mandatary. 
If,  however,  the  mandate  has  been  so  far  performed  before 
the  death  of  the  mandataiy  as  that  nothing  remains  involv- 
ing the  exercise  of  any  discretion  to  complete  it,  (as  if  the 
commission  were  to  purchase  books,  and  send  them  to  the 
mandator,  and  they  were  purchased,  but  not  sent,)  it  will  be 
the  duty  of  the  personal  representative  of  the  mandatary  to 
complete  the  mandate.  The  death  of  the  mandator  also 
dissolves  the  contract ;  but  if  the  mandate  is  in  part  exe- 
cuted, the  personal  representative  of  the  mandator  will  be 
bound  to  keep  the  mandatary  indemnified  from  all  damages 
he  may  suffer  in  consequence.  A  change  in  the  state  of  the 
parties,  as  the  marriage  of  a  femme  sole,  the  insanity  of  either 
one  of  the  parties,  may  operate  a  dissolution.  So,  also,  the 
authority  given  may  be  revoked  by  operation  of  law,  as 
where  the  power  of  the  mandator  over  the  subject-matter 
ceases,  or  by  the  act  of  the  mandator  revoking  such  au- 
thority. 

QUESTIOIs^S. 

What  is  a  mandate  ?  "Who  the  parties  to  it  ?  IIow  many  things 
necessary  to  the  creation  of  a  mandate  ?  "What  are  they  ?  What  must 
be  the  qualities  of  tlie  act  to  bo  done  ?  What  interest,  jjroperty,  or  title, 
has  the  mandatary  in  the  subject-matter  ?  What  is  non-feasance^  and 
what  rights,  if  any,  does  it  give  at  law  ?     What  is  a  mis-fcasancc^  and 


24:0  LOAN   FOE  USE. 

what  riglits,  if  any,  docs  it  give?  Wliat  illustrations  of  non-feasance 
and  mis-fcasanco  ?  What  position  as  to  care  and  diligence  does  the 
mandatary  occui)y  ?  Under  wJiat  principle  do  Lotli  the  mandatary  and 
tho  depositary  come  ?  What  is  the  mandatary  bound  to,  and  responsible 
for?  What,  the  point  of  difference  between  the  depositary  and  the 
mandatary  ?  What  is  the  rule  of  liability  derived  from  his  care  of  his 
own  property  ?  What  is  his  liability  where  his  situation,  occupation,  or 
employment,  imply  no  particular  knowledge  or  professional  skill  ?  What 
illustration?  What  contrary  illustration?  What  rule  derivable  from 
it  ?  What  where  the  person  employed  is  known  to  possess  no  particular 
knowledge  or  skill  ?  What  is  the  test  of  liability  considered  to  be  ? 
What  is  the  position  of  the  depositary  and  the  mandatary  who  convert  to 
their  own  use  the  property  ?  For  what  are  they  liable  and  why  ?  What 
illustration  ?  What  would  be  the  safe  ground  upon  which  to  place  it  ? 
What  else  is  the  mandatary  under  obligation  to  do,  and  upon  what  ? 
What  must  he  show  ?  What  must  he  restore  ?  What  is  he  entitled  to 
be  reimbursed?  Against  what  indemnified?  Who  may  dissolve  the 
contract  of  mandate  before  it  is  entered  upon  ?  After  entry  upon  it, 
what  may  dissolve  it  ?  And  why  ?  Suppose  the  mandate  almost  com- 
pleted, what  is  the  rule  ?  How  otherways  may  the  contract  be  dis- 
solved ? 

PART  IV. 

XOAN  FOR  rSE. 

§  452.  This  is  defined  to  be  a  bailment  or  loan  of  an 
article,  for  a  certain  time,  to  be  used  by  the  borrower  witb- 
ont  paying  for  the  use. 

The  wi'iters  on  bailment  have  given  tliis  a  prominent 
place  among  tlie  difi'erent  kinds,  of  wliicb  they  enumerate 
five.  Tliey  seem  to  take  for  granted  that  a  contract  based 
upon  the  above  definition  would  be  valid,  and  enforceable 
at  law.  That  it  would  be  so  under  the  civil  law,  there 
can  be  no  question.  But  is  it  so  under  the  common  ?  A 
brings  his  action  against  B  to  recover  a  span  of  horses, 
which  he  complains  that  B  wrongfully  withholds  from  him, 
having  made  demand  and  been  refused.  B  sets  up,  as  a 
defence,  that  he  borrowed  of  A  the  span  of  horses  for  the 
space  of  five  days  to  plough  a  certain  piece  of  land.  That 
by  vii'tue  of  this  loan,  he  became  possessed  of  the  horses, 


NO    CONSroEKATION   IN   LOAN    FOK    USE.  241 

and  was  employing  thein  in  tlie  ploughing  of  the  said  piece 
of  land,  which  was  not  yet  completed,  and  that  the  action 
was  brought  by  A  within  the  five  days.  Is  the  defence  per- 
fect at  law  against  the  action  by  A  ?  If  so,  then  this  third 
kind  of  bailment  is  entitled  to  its  position  and  rank  in  the 
list  of  bailments  ;  if  not,  tlien  it  should  be  stricken  from 
that  list,  and  there  are  but  four  instead  of  five  difierent 
kinds  of  bailment.  The  difficulty  is  with  the  consideration. 
Is  there  any  ?  and  if  so,  what  is  it  ?  Who  is  the  promisor, 
and  who  the  promisee  ?  The  only  promise  made  by  B  is 
to  use  the  horses  for  a  certain  purj^ose,  and  at  the  end  of  a 
certain  time  to  return  them.  Tliis  he  has  not  broken.  It 
may  be  said  that  A  is  the  promisor,  and  that  his  promise  is 
that  B  shall  have  the  horses  for  the  purpose  and  time  speci- 
fied. Granted.  And  then  what  binds  this  promise?  Is 
there  any  benefit  to  the  promisor?  None  whatever.  Is 
there  any  injury  or  disadvantage  resulting  from  the  perform- 
ance of  the  promise  to  the  promisee  ?  On  the  contrary,  all 
the  benefit  is  to  the  promisee.  His  injury,  if  any,  is  de- 
rived from  the  breach,  not  from  the  performance  of  the 
promise.  Mr.  Edwards^  see  Edwards  on  Bailment^  156,  is 
inclined  to  think  there  is  a  contract  between  the  parties, 
embracing  mutual  lyromises^  expressed  or  implied  from  the 
circumstances.  But  what  promise  is  there  on  the  part  of  B 
in  which  A  has  any  possible  interest,  or  such  an  interest  as 
amounts  to  a  consideration  ?  And  if  there  is  a  promise  on 
the  part  of  A  to  B,  as  there  must  be  to  defeat  the  action, 
what  is  the  consideration  that  binds  him  to  its  jierform- 
ance  ?  Tliere  does  not  appear  to  be  any,  and  I  am  unable 
to  perceive  upon  what  legal  princij^lcs  the  defence  can  be 
sustained.  It  may  be  said  that  the  same  objection  lies  to  the 
kind  of  bailment  termed  deposits  ;  and  so  iar  as  tliere  lacks 
the  elements  of  a  contract  that  will  enable  tlie  depositary  to 
resist  an  action  by  the  depositor  to  recover  the  deposit,  hav- 
ing first  made  demand  of  it  and  been  refused,  it  is  entirely 
true.  But  that  simply  seeks  to  ascertain  what  arc  the  mu- 
16 


242  OBLIGATION   OF   BOEKOWEE. 

tual  ri}2;lit3  and  obligations  of  the  parties,  while  the  relations 
continue  between  them  ;  those  relations  being  at  any  time 
terminable  by  the  depositor.  It  may  not,  therefore,  be  im- 
proper here  to  inquire  very  briefly  as  to  the  obligations  of 
this  kind  of  bailee  while  the  loan  for  use  continues  in  force. 

§  453.  Tliis  comes  under  a  different  principle  from 
either  one  of  the  preceding.  It  ranks  under  the  second 
general  principle  stated,  and  is  a  bailment  where  the  execu- 
tion of  the  trust  is  exclusively  for  the  benefit  of  the  bailee. 
Hence  such  bailee  is  held  responsible  for  slight  neglect. 
The  extraordinary  diligence  to  which  he  is  bound  is  not 
satisfied  with  that  degree  of  care  which  he  would  naturally 
exercise  over  his  own  property.  He  must  bring  to  it  all 
possible  care.  The  use  made  of  the  thing  borrowed  must 
be  strictly  confined  to  that  for  which  it  was  obtained.  It 
must  be  also  limited  to  the  person  obtaining  it.  Thus,  where 
to  an  action  of  trespass  the  plea  inter[)osed  was,  that  the 
horse  was  lent  to  him  by  the  plaintiff,  and  license  given  him 
to  ride,  in  virtue  of  which  the  defendant  and  his  servants 
had  alternately  ridden  the  animal,  held,  that  the  license 
was  annexed  to  the  person  of  the  defendant,  and  could  not 
be  communicated  to  another.  Bringloe  v.  Morrice^  1  Mod. 
210. 

§  454.  A  great  difficulty  here  occurs  in  settling  what  shall 
be  deemed  slight  neglect.  It  must,  of  course,  depend  much 
upon  the  circumstances  of  each  particular  case.  There  is 
no  liability  for  losses  by  inevitable  accident,  or  by  casualties 
occurring  without  any  fault  of  the  borrower.  The  same  also 
where  the  loss  occurs  from  robbery  or  the  exertion  of  supe- 
rior force.  The  return  of  it  must  be  at  a  proper  time,  and 
in  a  proper  condition,  together  with  all  its  increments  and 
offspring.  If  not  so  returned,  the  borrower  wiU  be  held 
liable  for  aU  losses  and  injuries  to  which  it  may  be  sub- 
jected. Tlie  return  must  be  to  the  dwelling-house  of  the 
lender,  unless  the  thing  properly  belongs  elsewhere.  And 
hence  where  the  defendant  borrowed  the  plaintiff's  horse 


LIABILITY   OF   BORKO"\VEE.  243 

and  carriage,  which,  at  the  time,  were  at  a  livery  stable,  the 
parties  residing  in  the  same  city  ;  it  was  held  the  return 
should  be  at  the  plaintiff's  residence.  Esmay  v.  Fanning^ 
9  Barl).  176. 

Kestoration  to  the  true  owner,  doing  no  injury  or  injus- 
tice to  thelender,  is  held  to  be  sufficient.  "Where  the  loan 
has  been  to  several  persons  jointly,  each  is  liable  in  solido 
for  its  return.  The  borrower  is  never  liable  for  any  loss  or 
injuiy  occasioned  simply  by  its  use.  'The  risk  of  that  is 
taken  by  the  lender.  But  if  any  loss  or  injury  occurs  tlirough 
the  negligence  of  the  borrower,  he  may  be  made  liable  in 
an  action  for  the  damages.  Tlie  borrower  has  no  special 
property  in  the  thing  loaned,  though  his  possession  is  suffi- 
cient for  him  to  protect  it  by  an  action  of  trespass  against  a 
wrong  doer.  And  in  all  cases  of  simple  bailment,  without 
reward,  an  action  may  be  maintained  either  by  the  bailor 
or  bailee  for  any  wrong  done  to  the  bailee's  possession.  Tlie 
bailor  can  bring  it  by  virtue  of  his  general  property  in  the 
thing  bailed,  and  the  bailee  because  of  his  possession  and 
liability  over  to  the  bailor.  But  a  judgment  and  satisfaction 
by  one  is  a  bar  to  an  action  by  the  other. 

QUESTION'S. 

What  is  a  loan  for  use  ?  Does  this  species  of  bailment  embrace  a 
contract  valid  and  enforceable  at  law  ?  What  principle  does  this  species 
of  bailment  come  under  ?  What  is  the  bailee  here  held  responsible  for  ? 
What  is  the  extraordinary  diligence  hero  required  not  satisfied  by? 
What  must  he  bring  to  it?  To  what  must  the  use  of  the  thing  bor- 
rowed be  confined  ?  To  what  must  it  be  limited  as  to  person  ?  What 
illustration  ?  What  does  slight  neglect  depend  upon  ?  What  is  the  lia- 
biUty  in  case  of  loss  by  inevitable  accident?  Or  by  casualties?  How 
as  to  robbery,  or  superior  force  ?  ITow  must  the  return  be  ?  Wliat 
with  ?  What  if  not  so  returned  ?  Where  must  the  return  bo  ?  What 
illustration?  To  whom  should  the  return  be  made?  What  liability 
where  loan  made  to  several  jointly  ?  For  wliat  is  borrower  not  liable  ? 
Who  takes  risk  of  such  ?  To  what  liable,  when  loss  occurs  tlirough 
negligence?  Has  borrower  any  special  property  ?  Who  may  bring 
action  when  wrong  is  done  to  possession  ?  What  eflfcct  has  recovery 
and  satisfaction  by  cither  ? 


244  WHAT  MAY  BE  PLEDGED.  •■ 

PART  V. 

PLEDGE. 

§  455.  Tlie  pledge  or  pawn  is  a  bailment  of  personal 
property  as  a  security  for  some  debt  or  engagement.  The 
first  inquiry  here  is  as  to  the  property  that  is  susceptible  of 
being  pledged.  A  debtor  may  pledge  any  of  his  personal 
property  down  to,  and  including,  his  necessaries.  There  is 
nothing  exempt  except  the  pay  and  emoluments  of  officers 
and  soldiers.  One  essential  to  the  creation  of  the  jjledge  is 
the  delivery  of  the  article  pledged  to  the  pledgee.  Tliis 
necessity  serves  as  a  limitation  of  the  subject-matter  of  the 
pledge,  confining  it  to  personal  property  in  actual  existence, 
and  susceptible  of  delivery.  The  great  convenience  of 
pledging,  and  the  frequency  with  which  it  is  resorted  to, 
have  induced  the  efi'ort  to  escape  from  both  the  last  men- 
tioned limitations.  There  could  be  no  question  but  the 
subject-matter  of  the  pledge-covered  property  beyond  what 
is  usually  styled  efi'ects  ;  that  it  embraced  also  things  in  ac- 
tion, such  as  negotiable  paper,  and  other  evidences  of  debt 
— in  other  words,  that  it  would  go  as  far  as  there  was  a  thing 
susceptible  of  delivery.  But  a  very  large  proportion  of  the 
capital  of  the  country  is  invested  in  stocks  of  incorporated 
companies,  such  as  bank,  raili'oad,  insurance,  6zc.,  in  which 
the  owner  holds  merely  the  scrip  or  certificate  of  the  com- 
pany that  he  is  owner  of  the  number  of  shares  stated.  The 
question  is,  how  can  this  stock  be  pledged  so  as  to  be  a  valid 
security  to  the  pledgee.  The  method  is  to  deliver  the  scrip, 
or  company's  certificate,  to  the  lender,  accompanied  by  a 
power  of  attorney  to  such  lender,  authorizing  the  actual 
transfer  on  the  books  of  the  company.  This  actual  transfer 
is  frequently  postponed,  or  entirely  omitted,  but  actual  no- 
tice of  the  transfer,  as  such  security,  should  be  immediately 
given  to  the  company,  or  otherwise  a  honafide  purchase  and 
transfer  on  the  company's  books  might  embarrass,  if  not 


DIFFEEENCE   BETWEEN   MOKTGAGE   AND   PLEDGE  245 

endanger,  the  security.  The  limitation  to  property  in  actiiul 
existence  precludes  the  pledging  of  that  which  is  to  be  ac- 
quired infuturo,  but  the  law  permits  an  hypothecation  in 
such  case,  which  answers  very  effectually  the  pui-pose  of  a 
pledge.  A  brickmaker  stipulates  with  the  lessee  of  a  brick- 
yard in  which  he  manufactures  bricks,  that  they  should 
retain  the  bricks  to  be  made  there,  as  security  for  their 
advances  to  him.  Held  that  this  operated  as  a  hypotheca- 
tion, and  that  the  bricks  became  pledged  under  the  contract 
as  fast  as  they  were  manufactured.  Macomler  v.  ParTcer, 
U  Pick.  497,  505. 

§  456.  It  becomes  of  great  importance  in  considering 
the  doctrine  of  pledge  to  understand  the  points  of  diiference 
between  a  mortgage  of  goods,  and  a  i^Udge  or  ^j*^^-;?^  of  them. 
In  a  mortgage  the  entire  legal  title  passes,  conditionally,  to 
the  mortgagee,  and  if  the  goods  are  not  redeemed  at  the 
time  stipulated,  the  title  becomes  absolute  at  law,  although 
equity  will  interfere  to  allow  a  redemption.  In  the  pawn 
or  pledge,  a  special  property  only  passes  to  the  pawnee  or 
pledgee,  the  general  property  still  remaining  in  the  pawnor 
or  pledgor.  Again,  in  the  mortgage^  inasmuch  as  the  right 
of  property  passes  by  the  conveyance  to  the  mortgagee,  the 
possession  is  not  essential  to  create  or  support  the  title. 
Hence  that  possession  may  remain  in  the  mortgagor  at 
common  law,  and  yet  the  mortgage  be  valid  ;  because  the 
title  transferred  enables  the  mortgagee  to  possess  himself  of 
the  property.  But  in  a  xyledge,  the  right  of  the  pledgee  is 
not  consummated  except  by  possession ;  and  when  that  is 
relinquished,  the  right  of  the  pledgee  is  extinguished  or 
waived.  Although  the  above  distinctions  will  be  admitted 
to  be  correct,  yet  there  may  be  a  pledge  although  the  legal 
title  passes  to  the  pledgee.  An  illustration  of  this  would  be 
where  a  promissory  note  is  given,  secured  by  stocks,  depos- 
ited with  the  creditor  by  the  debtor  as  collateral  security 'for 
the  amount  contained  in  the  note.  Ilere  the  legal  title  must 
pass  to  the  creditor,  and  the  principle  is  so  ftir  modified  as 


240  INTEREST  OF  PLEDGOR  IN  PLEDGE. 

to  declare  that  the  transfer  of  the  legal  title  is  not  in  any 
case  inconsistent  with  a  pledge,  if  the  debtor  has  a  right  to 
the  restoration  of  t]ie  property,  on  payment  of  the  debt  at 
any  time,  although  after  it  falls  due.  Wilson  v.  Little,  2 
Comst.  443. 

§  457.  The  next  inquiry  relates  to  the  amount  of  interest 
or  property  which  it  is  necessary  for  the  pledgor  to  have  in 
the  pledge  in  order  that  he  may  make  such  a  disposition  of 
it.  "We  can  only  inquire  as  between  pledgor  and  pledgee, 
and  as  between  them  this  inquiry  can  very  seldom  arise. 
The  pledgor,  however  weak  or  deficient  his  title,  has  always 
his*  right  to  redeem  as  against  the  pledgee,  and  the  latter 
has  no  right  to  interpose  the  title  of  a  third  person,  unless 
that  third  person  enforces  against  him  his  own  superior  right 
of  property.  But  where  the  pledgor  has  only  a  limited  title 
in  the  thing  pledged,  as  an  estate  for  life,  or  for  years,  the 
security  he  gives  to  his  creditor  is  limited  to  the  extent  of 
his  interest,  and  when  that  expires  the  pledgee  must  surren- 
der it  up  to  the  person  who  succeeds  to  the  ownership. 

§  458.  This  kind  of  bailment  comes  under  the  third 
principle  stated,  viz. :  where  the  execution  of  the  trust  is 
for  the  benefit  of  both  parties,  or  of  one  of  them,  and  a 
third  party.  The  benefit  to  the  pledgee  is  that  he  is  ren- 
dered secure  in  the  payment  of  his  debt,  while  the  pledgor 
is  thereby  enabled  to  procure  an  extension  of  credit.  This 
binds  the  pledgee  to  take  ordinary  care,  and  renders  him 
answerable  only  for  ordinary  neglect.  It  is  essential  to 
the  being  of  a  pledge  that  it  should  be  delivered  as  security 
for  some  debt  or  engagement.  It  may  be  for  any  kind  of 
engagement ;  so  also  the  debt  may  be  one  to  be  incurred  in 
the  future. 

§  459.  The  pledge  carries  with  it,  as  accessorial,  all  its 
natural  increase.  Its  security  for  a  debt  alone  depends  upon 
its  remaining  in  the  possession  of  the  pledgee.  Hence  its 
loss,  or  re-delivery  to  the  pledgor,  or  its  voluntary  waiver, 
will  deprive  the  pledgee  of  his  security. 


EIGHTS  OF  THE  PLEDGEE.  247 

§  460.  The  pledgee,  unlike  every  previous  bailee,  has  a 
special  property  iii  the  pledge.  This  entitles  him  to  the  ex- 
clusive possession  of  it,  during  the  tune,  and  for  the  objects 
for  which  it  was  pledged,  not  only  as  against  strangers,  but 
also  the  pledgor  himself.  But  his  rights  grow  out  of,  and 
are  strictly  defined  by,  the  contract  into  which  the  two  par- 
ties have  entered.  If  two  debts  at  the  time,  or  subsequently, 
become  due  to  the  pledgee,  he  can  retain  the  pledge  only  as 
security  for  the  one  it  was  given  to  secure.  A  new  debt 
clearly  shown  to  have  been  contracted  upon  the  credit  of 
the  pledge,  may  enable  the  pledgee  to  retain  it  until  pay- 
ment ;  but  this  is  a  fact  the  creditor  is  bound  to  make  out. 
It  is  never  to  be  extended  by  mere  intendment.  It  has  an 
application,  however,  not  merely  to  the  debt  or  engagement, 
but  also  to  the  interest,  and  to  all  incidental  charges  and 
expenses. 

§  461.  But  the  right  of  retainer  alone  would  never  ena- 
ble him  to  realize  his  debt.  He  has  a  further  right  of  sell- 
ing the  pledge,  and  of  applying  its  proceeds  towards  the 
payment  of  his  debt,  if  the  jjledgor  fails  in  his  engagement 
to  redeem  it.  This  is  on  the  sujjposition  that  some  time  is 
fixed  upon  for  such  payment  and  redemption.  There  may 
be  no  time  fixed,  and  in  such  case  the  j)ledgce  may  insist 
upon  a  prompt  fulfilment  of  the  engagement ;  and  if  the 
pledgor  neglects  or  refuses,  he  may,  upon  due  demand  and 
notice  to  him  the  pledgor,  require  a  sale  of  it.  The  eft'ect 
of  the  debts'  falling  due,  and  remaining  unpaid,  is  not  to 
transfer  the  absolute  property  in  the  pledge  to  the  pledgee. 
It  is  not,  therefore,  any  more  his  property  after  the  falling  due 
of  the  debt  than  it  was  before.  What  further  right  then  has 
he  consequent  upon  that  fact  ?  His  rights  are  twofold.  He 
may  proceed  personally  against  the  debtor  and  collect  his  debt 
out  of  his  property,  and  that  would  operate  to  redeem  the 
pledge,  or  he  may  proceed  against  the  pledge,  which  is  a  pro- 
ceeding m  rem^  and  take  the  necessary  steps  to  ajiply  it  on 
his  debt.   To  do  this,  the  first  thing  incumbent  upon  him  is  to 


248  REMEDIES   OF   THE   PLEDGEE. 

demand  the  payment  of  the  del)t,  and  this  he  must  do,  al- 
thoni:;h  tlio  debt  is  payable  presently  without  demand,  and 
although  by  the  terms  of  tlie  pledge,  he  was  authorized  to  sell 
at  public  or  private  sale  without  notice  to  the  debtor.  Wilson 
V.  Ziitle,  2  Comst.  443.  This  requires  much  caution  in  pro- 
ceeding, because  if  the  pledge  has  been  improperly  sold,  the 
pledgor  may  maintain  an  action  for  its  value  without  making 
a  tender  of  the  debt  for  which  the  property  was  pledged. 
Having  properly  made  the  demand  and  been  refused,  he  has 
an  election  of  either  one  of  two  modes  of  proceeding  against 
the  pledge.  He  may  file  his  bill  in  equity,  asking  a  decree 
of  sale,  and  thus  foreclose  the  equity  of  redemption  of  the 
pledgor ;  or  he  may  adopt  the  more  summary  method  of 
selling  without  judicial  process,  upon  merely  gi^'ing  reason- 
able notice  to  the  debtor  to  redeem.  Tlie  notice,  however,  is 
indisj)ensable.  DeLide  v.  Priestman,  1  Broimi's  Penn. 
Bep,  176.  There  is,  however,  one  exception  to  the  right  to 
sell  in  case  of  non-payment,  and  that  is  wdien  the  pledge 
consists  of  negotiable  paper.  Then  it  is  held  that  in  the 
absence  of  any  special  power  authorizing  a  sale,  the  pledgee 
has  no  right  to  sell  the  securities  either  at  public  or  private 
sale,  but  must  hold  on,  collect,  and  apply  as  the  paper  falls 
due.     Wheelei'  v.  Newbold^  16  New  York  Rep.  392. 

§  462.  "Where  the  pledge  for  one  debt  consists  of  several 
things,  each  one  is  liable  for  the  whole,  and  if  one  or  more 
should  perish  without  default  of  the  pledgee,  he  may  look 
to  all  the  others  for  his  indemnity.  Any  surplus  remaining, 
after  paying  the  debt,  belongs  to  the  pledgor,  and  he  is 
responsible  for  making  up  any  deficiency  it  may  fall  short 
of  paying. 

§  463.  The  rights  of  the  pledgee  do  not  go  far  enough  to 
enable  him  to  appropriate  the  pledge  to  the  payment  of  his 
debt.  His  only  remedy  is  to  sell  it.  !N^or  can  he  become 
the  purchaser  of  it  on  a  sale.  Should  it  be  of  greater  value 
than  the  debt,  and  hence  lead  the  pledgee  to  decline  selling, 
thus  in  the  end  practically  appropriatmg  it  to  the  debt,  the 


LIABILITY  OF  PLEDGEE  FOK  LOSS.  249 

pledgor  could  undoubtedly  have  relief  in  equity,  -wliicli 
would  decree  a  sale  and  payment  over  of  any  surplus  to  tlie 
pledgor. 

§  4:64:.  In  regard  to  the  extent  to  -which  the  pledgee  may 
rightfully  use  the  pledge,  the  following  rules  are  applicahle. 
If  the  use  is  essential  to  its  preservation  it  is  then  not  only 
his  right,  but  his  duty  to  use  it.  If  it  is  positively  injurious 
to  the  pledge,  as  in  the  case  of  clothes,  then  such  right  is 
interdicted.  If  the  keeping  be  a  charge  to  the  pledgee,  as 
in  the  case  of  a  cow  or  horse,  then  it  may  be  used  by  way 
of  recompense  for  the  keeping.  As  the  pledgee  is  bound 
to  account  for  all  income,  profit,  or  advantage,  derivable 
from  the  pledge,  he  may  be  allowed  first  to  deduct  all  neces- 
sary charges  and  expenses.  And  so  also  all  extraordinary 
expenses  incurred  by  him  in  its  preservation. 

§  465.  Some  diversity  of  opinion  has  prevailed  relating 
to  the  rule  of  liability  in  case  the  pledge  sustains  injury  or 
loss.  It  seems  to  be  clearly  conceded  that  in  case  of  loss 
by  casualty,  or  by  unavoidable  accident,  or  by  superior 
force,  such  as  robbery,  or  where  it  perishes  from  intrmsic 
defect  or  infirmity ;  the  pledgee  will  not  be  held  responsible, 
without  the  pledgor's  showing,  in  connection  with  the  loss, 
and  conducing  to  it,  some  act  or  omission  in  violation  of  his 
duty.  Tlie  difference  of  opinion  has  been  as  to  whether  the 
mere  fact  of  its  being  stolen  should  subject  to  liability,  the 
civil  law  taking  the  afiirmative,  and  the  common,  as  ex- 
pounded by  Lord  Coke,  1  Cokeys  Inst.  80  a,  the  negative. 
A  compromise  has  finally  been  cfi'ected  by  not  considering 
tlie  mere  fact  of  stealing  as  evidence  of  negligence  or  the 
want  of  it ;  but  to  go  into  an  examination  of  the  circum- 
stances under  which  it  occuiTcd,  and  to  determine  from 
them,  whether  the  negligence  was  such  as  should,  or  should 
not,  subject  to  liability.  This  is  undoubtedly  the  cquitablo 
rule,  as  the  larceny  may  have  occurred  under  circumstances 
of  entire  innocence  on  the  part  of  the  pledgee,  or  it  may 
have  grown  out  of  a  culpable  negligence  in  exposing  it.   This 


250  EIGHTS  OF  THE  PLEDGOK. 

doctrine  only  applies  while  the  relations  growing  ont  of  thig 
peculiar  coutr,act  continue.  These  relations  may  cease  when 
the  pledgee  does  anything  clearly  inconsistent  with  his 
duty,  or  in  neglect  of  it,  or  when,  on  being  tendered  the 
debt,  interest  and  expenses,  if  any,  he  refuses  to  redeliver 
the  pledge.  His  special  property  in  it  then  ceases.  He  be- 
comes a  "UTong  doer,  and  the  pledge  remains  at  his  sole  risk. 
Subject  to  liability  for  loss  the  pledgee  has  the  power  of  as> 
signing  it  over  to  another  for  safe  keeping,  or  he  may  dis- 
pose of  his  qualified  j^roperty  in  it  by  way  of  sale  or  assign^ 
ment  as  collateral  security  for  a  debt. 

§  4:66.  The  most  important  right  of  the  pledgor,  is  that 
of  redeeming  his  pledge.  The  difi'erence  in  this  respect, 
between  a  pledge  and  a  mortgage  is,  that  in  the  latter  the 
title  becomes  absolute  on  non-payment  of  the  debt,  and 
nothing  but  the  equity  of  redemption  remains.  But  in  the 
former,  the  pledgor,  having  never  parted  with  the  general 
property,  may  redeem  at  law,  although  he  has  not,  by  pay- 
ment on  the""  day,  strictly  complied  with  the  conditions  of 
his  contract.  This  right  of  redemption  is  so  inherent  in  the 
very  nature  of  the  pledge  that  the  law  makes  it  inalienable, 
and  renders  void  all  contracts  stipulating  that  the  pledge 
shall  be  irredeemable.  In  case  of  the  death  either  of  the 
pledgor  or  the  pledgee,  the  rights  and  obligations  belonging 
to  each  descend  to,  and  rest  in,  the  personal  representatives. 

§  467.  A  point  of  much  doubt  and  difficulty  has  arisen 
regarding  the  right  of  a  sheriflf,  under  an  execution  against 
the  pledgor,  to  take  the  pledge  out  of  the  possession  of  the 
pledgee,  and  sell  his  right  and  interest  in  it.  In  the  State 
of  Kew  York  the  cjuestion  came  up  in  Stief  v.  Jlarf,  in 
which  the  charge  of  the  court  raising  the  question  was,  that 
the  sheriff,  holding  an  execution  against  the  pledgor,  may, 
by  virtue  thereof,  take  the  property  pledged  out  of  the  hands 
of  the  pledgee  into  his  own  possession,  and  sell  the  right 
and  interest  of  the  pledgor  therein.  The  Supreme  Coui't 
affirmed  this  doctrine,  and  in  the  Court  of  Appeals  1  Comst. 


MODES  OF  EXTrnGUISHING  PLEDGE.  251 

20,  the  judges  being  equally  divided,  the  judgment  of  the 
Supreme  Court  stood  affirmed.  This,  in  a  recent  case,  is 
still  regarded  as  an  open  question. 

§  468.  Tliere  are  several  modes  of  extinguishing  the 
contract  of  pledge,  as  :  1.  Bj  payment  or  discharge  of  the 
debt.  2.  By  taking  a  higher  or  difterent  security  with  no 
agreement  to  retain  the  pledge  for  that  also.  3.  By  extinc- 
tion of  the  debt  by  operation  of  law.  4.  By  destruction  of 
the  thing  pledged.  And  5.  By  any  act  of  the  pledgee 
amounting  to  a  release  or  waiver  of  the  pledge. 

QUESTIONS. 

"Wliat  is  a  pledge  ?  What  the  first  inquiry  ?  TTliat  may  a  debtor 
pledge  ?  What  only  is  exempt  ?  What  is  essential  to  the  creation  of  a 
pledge  ?  Whjjt  is  the  limitation  of  a  pledge  ?  What  has  been  the  effort 
in  regard  to  this  limitation  ?  What  beyond  effects  may  be  pledged  ? 
How  far  does  it  go  ?  How  is  stock  held  ?  What,  the  evidence  of  its 
ownership  ?  What  is  the  method  of  pledging  stock  ?  What  should  be 
given  to  the  company  ?  For  what  reason  ?  How  can  the  purpose  of  a 
pledge  be  answered  as  to  future  property  ?  What  instance  in  illustra- 
tion ?  What  is  the  important  point  of  difference  between  a  mortgage 
and  a  pledge  of  property  ?  What,  the  difference  between  the  two  as  to 
the  point  of  possession  ?  For  what  reason  may  there  be  a  pledge  where 
the  legal  title  passes  to  the  pledgee  ?  What  instance  in  illustration  ? 
What  amount  of  interest  or  property  is  it  necessary  for  the  pledgor  to  have 
in  the  pledge  ?  When  can  the  pledgee  interpose  the  title  of  a  third  per- 
son against  the  claims  of  the  pledgor  ?  How  is  it  when  the  pledgor  has 
only  a  limited  title  to  the  pledge  ?  What  principle  does  this  species  of 
bailment  com^  under  ?  What,  and  with  whom,  is  the  benefit  in  this 
kind  of  bailment  ?  What  kind  of  care  and  neglect  are  here  devolved 
upon  the  pledgee  ?  What  is  essential  to  the  being  of  a  pledge  ?  What 
does  the  pledge  carry  with  it  ?  What  does  its  security  for  a  debt  depend 
upon  ?  How  may  a  i)ledgeo  be  deprived  of  his  security  ?  How  does  the 
pledgee  stand  related  to  the  pledge  ?  What  does  his  special  property 
entitle  him  to?  What  do  his  rights  grow  out  of,  and  by  what  defined! 
What  the  rule  where  there  are  two  debts  contracted  at  the  time,  or  one 
Bubscqucntly  ?  What  the  rule  when  a  new  debt  is  contracted  on  the 
strength  of  the  pledge  ?  What  is  the  creditor  to  make  out  ?  What 
further  right  to  the  pledgee  besides  that  of  retainer  ?  How  is  it  where 
there  is  no  time  fixed  for  the  payment  of  the  debt  ?    What  effect  has 


252  CONTKAOT  OF  HDJINO. 

the  debt's  fulling  dno  being  unpaid  and  the  pledge  remaining  in  th« 
liands  of  the  jjledgcc  ?  What  then  are  the  rightrf  of  the  pledgee  ?  What 
is  the  first  thing  done  in  proceeding  against  the  pledge?  After  demand 
and  refusal  what  next  ?  What  course  must  be  take  when  the  pledge 
consists  of  negotiable  paper?  What  his  rights  when  several  things  are 
pledged  for  one  debt  ?  What  becomes  of  any  surplus  remaining  ?  How 
in  case  of  deficiency  ?  Can  the  pledgee  appropriate  the  pledge  in  pay- 
ment of  his  debt  ?  What  is  his  only  remedy  ?  Can  he  become  a  pur- 
chaser on  its  sale  ?  Suppose  it  is  of  greater  value  than  the  debt,  and  he 
omits  or  declines  soiling  it  ?  What  are  the  rules  relative  to  the  use  of 
the  pledge  by  the  pledgee  ?  What  may  be  deducted  from  the  income, 
])rofit,  and  advantage?  In  case  the  pledge  sustains  loss  or  injury,  what 
is  the  rule  of  liability  ?  When  is  the  pledgee  clearly  exonerated  from 
liability  1  Uow  is  it  when  it  is  stolen  ?  What  then  the  rule  of  the 
civil,  the  common  law,  and  the  compromise  ?  When  does  this  doctrine 
only  apply  ?  When  the  relations  between  pledgor  and  pledgee  cease, 
and  how  may  they  be  made  to,  what  is  the  rule  ?  AVhat  may  the 
pledgee  do  subject  to  his  liability  for  loss  ?  What  is  the  i^ortant  right 
of  the  pledgor  ?  What  the  difference  in  this  respect  between  a  mortgage 
and  a  pledge  ?  How  strictly  is  the  right  of  redemption  guarded  ?  WTiat 
occurs  in  case  of  the  death  of  either  pledgor  or  pledgee  ?  What  is  the 
right  of  a  sheriff  under  an  execution  against  the  pledgor  ?  What  are  the 
several  modes  of  extinguishing  the  contract  of  pledge  ? 

PART  YI. 

CONTEAOT    OF    HIEING. 

§  469.  This  is  a  bailment  of  a  personal  chattel  wliere  a 
compensation  is  to  be  given  for  its  use,  or  for  labor  or  ser- 
vices about  it.  Or  it  may  be  called  a  loan  for  hire,  or  a 
hiring  or  letting  of  goods,  or  of  labor  and  services  for  a 
reward.  This  is  designed  to  cover  all  the  possible  kinds  of 
hh-mg,  whether  it  applies  to  the  thing  hired,  or  the  labor 
and  services  hired  about  it,  or  to  labor  and  services  hired 
generally.  Including,  as  it  is  made  to  do,  the  duties  and 
responsibilities  of  the  innkeeper,  and  the  common  carrier, 
it  is  by  far  the  most  important  and  extensive  of  all  the 
different  kinds  of  bailment. 

§  470.  In  the  hire  of  things,  we  have  two  parties,  the 
letter  to  hire^  and  the  hirer.    It  is  a  contract  by  which  tho 


OBLIGATIONS   OF   LETTER  TO   IXIRE. 

hirer,  for  a  compensation,  eitlicr  expressly  stipulated,  or  left 
to  be  legally  ascertained,  as  to  amount,  obtains  from  the 
letter  to  hire,  a  certain  chattel,  usually  for  a  certain  purpose. 
The  rights,  duties,  and  liabilities  of  each  party  flow  natur- 
ally from  the  terms  of  the  contract.  In  the  first  place,  there 
is  the  tiling  which  is  the  subject-matter.  And  this  it  is 
obvious  must  be  in  existence,  and  capable  of  being  let  to 
hire.  Tliere  must  be  some  time  during  which  the  bailment 
is  to  continue,  and  some  purpose,  either  express  or  implied, 
to  which  the  thing  is  to  be  put.  It  must  be  adapted  to  this 
purpose,  and  as  susceptible  of  accomplishing  it  as  other 
thmgs  of  the  like  kind  ordinarily  are.  The  hirer  must  have 
the  perfect  right  to  its  use  and  enjoyment  during  the  time, 
and  for  the  pui-pose,  for  which  it  is  hired.  To  secure  him 
this,  one  thing  is  necessary  which  forms  no  part  of  the  loan 
for  use,  and  that  is  the  element  of  price,  or  compensation 
for  the  use.  This  should  be  made  certain  and  determinate 
by  the  stipulation  of  the  parties,  or  it  should  bo  capable  of 
being  reduced  to  certainty  by  legal  means.  Both  the  thing 
itself,  and  the  purpose  to  which  it  is  to  be  used,  must  be 
such  as  the  law  sanctions  and  sustains.  Tools  and  instni- 
ments  are  let  by  a  locksmith  to  thieves  for  the  pui-pose  of 
burglariously  entering  houses  and  stealing  goods  from  them. 
Such  a  bailment  would,  of  course,  be  illegal  and  void. 

§  471.  The  obligations  of  the  letter  to  hire  relate  princi- 
pally to  his  duties  in  reference  to  the  thing  itself.  He  is 
not  only  bound  to  deliver  it  to  the  hirer  in  a  fit  order  and 
condition,  but  also  is  to  keep  it  in  suitable  repair,  and  to 
warrant  it  against  those  faults  and  defects  which  would 
prevent  the  due  enjoyment  and  use  of  it.  If  any  such  are 
known  to  exist,  they  subject  him  to  an  action  as  for  a  de- 
ceit ;  if  not,  they  deprive  him  of  all  remedy  on  the  contract. 
lie  is  also  to  do  no  act  that  will  disturb  or  interrupt  the 
hirer  in  its  free  use  and  enjoyment.  Tlie  principle  upon 
which  the  rejniirs  and  warranty  against  defect  should  be 
governed  is,  that  the  thuig  should  be  kept  by  the  letter  to 


254:  OBLIGATIONS   AND   DUTIES   OF  THE   DIREK. 

hire  diirinc^  tlic  entire  period  of  the  bailment,  in  sucli  a 
state  and  condition  as  at  all  times  to  subserve  tlie  purpose 
for  which  it  is  employed.  Otherwise  the  consideration,  or 
price  of  the  hire,  would  fail,  and  the  contract  be  broken. 

§  472.  The  hirer  has  several  obligations  to  perfonn  on 
bis  part.  During  the  continuance  of  the  contract,  and  while 
using  it  for  the  purposes  contemplated  in  the  bailment,  he 
has  a  special  property  in  the  thing  sufficient  not  only  to  enable 
him  to  protect  himself  against  a  wrong  doer,  but  also  against 
the  owner  himself.  He  has  purchased  the  right  to  its  ex- 
clusive use  and  enjoyment  during  the  period  of  the  bail- 
ment. 

§  473.  The  hirer  is  bound  to  put  and  keep  the  thing 
employed  in  the  use,  and  for  the  purpose,  contemplated  in 
the  bailment.  The  diversion  of  it  to  a  different  use  or  pur- 
pose will  not  only  render  him  liable  for  damages  for  a 
breach  of  contract,  but  will  also  subject  him  to  a  different 
grade  of  liability  for  loss.  If  such  loss  occurs  during  the  mis- 
user, in  order  to  sustain  an  action  of  trover  for  its  value,  it 
must  be  shown  on  the  part  of  the  bailor  that  the  misuser 
occasioned  the  loss.    Harvey  v.  Epes,  12  Gratt.  153. 

§  474.  Another  source  of  duties  is  derived  from  the  care 
and  diligence  the  hirer  is  bound  to  exercise  in  reference  to 
the  thing  he  hires.  This  species  of  bailment  being  for  the 
mutual  benefit  of  both  parties,  the  hirer  is  bound  only  to 
the  exercise  of  ordinary  care,  and  answerable  for  ordinary 
neglect.  Inevitable  casualty  or  superior  force  will  always 
exonerate.  And  there  will  be  no  liability  if  there  has  been 
no  omission  of  reasonable  diligence.  Slaves  hired  of  the 
owner  run  away  from  the  hii-er  in  a  foreign  port  and  are 
lost.  They  might  have  been  confined  and  the  loss  prevented. 
Held,  that  if  the  hirer  acted  in  good  faith  and  with  reason- 
able care  he  would  not  be  responsible.  Beverley  v.  Brook, 
2  Vnieat.  100.  The  proof  of  sufficient  negligence  to  charge 
the  hirer  must  be  made  by  the  letter  to  hire. 

§  475.  The   hirer  must  also   restore  the  thing  at  the 


HIKING  OF  LABOE  AND  SEEVICES.  255 

close  of  the  contract  in  as  good  a  condition  as  wlien  re- 
ceived, except  the  effect  upon  it  of  natural  ■vrear,  the  act  of 
God,  or  any  unavoidable  accident,  lie  must  pay  the  hire 
or  recompense.  This  contract  may  be  terminated  either  by 
efflux  of  time,  by  accomplishing  the  object  for  which  it  was 
hired,  by  the  destruction  of  the  thing  hired  without  the 
fault  of  the  hirer,  by  a  voluntary  dissolution  of  the  contract, 
or,  by  operation  of  law,  as  in  case  the  hirer  becomes  the 
owner  of  the  thing  hired. 

§  476.  Another  species  of  hiring  is  wliere  the  labor  and 
services  of  others  about  the  thing  are  the  subject-matter  of 
the  hiring.  This  properly  only  applies  where  the  stock  and 
materials  belong  to  the  bailor  or  employer,  and  are  entnisted 
to  the  bailee,  who  employs  the  labor  and  services  of  others 
to  be  expended  upon  them.  There  are,  however,  many 
different  ways  in  which  questions  come  up  imder  this  species 
of  bailment.  Not  unfrequently,  the  thing  about  which  the 
labor  and  services  are  to  be  performed,  and  while  they  are 
in  the  act  of  being  so,  perishes  by  its  own  inlierent  defect,  or 
by  some  means  is  destroyed  ;  and  then  arises  the  question  as 
to  loss,  and  as  to  compensation  for  services.  The  risk  of  loss 
in  such  case  usually  follows  the  ownership  of  the  materials. 
The  workman  who  has  merely  added  his  labor  to  the  prop- 
erty, without,  in  any  way,  conducing  to  the  loss,  ought  not 
to  be  the  sufferer  by  it.  But  if  he  has  made  his  contract  in 
such  a  way  that  he  is  to  complete  the  work  for  a  specific 
sum  before  payment,  and  the  work  being  nearly  completed, 
the  thing  is  destroyed  by  an  accidental  fire,  he  can  recover 
nothing ;  as  the  performance  being  a  condition  precedent, 
tlien  devolves  upon  him  the  whole  risk.  And  so  if  the 
workman  has  furnished  the  materials,  the  loss  will  fall  upon 
him.  And  he  will  also  take  the  risk  of  loss  when  it  has  in 
any  way  resulted  from  his  own  unskilfuluess  in  the  per- 
formance of  his  labor  and  services. 

§  4TT.  This  contract  being  for  the  mutual  benefit  of  both 
parties,  all  that  the  law,  ujion  its  own  prmciples,  should 


25G  DEGKEE  OF  SKILL  EEQUIRED. 

require,  is  ordinary  diligence.  But  the  occasions  here  are 
very  frequent  where  something  beyond  ordinary  care  and 
diligence  is  required.  This  is  always  the  case  where  the 
clement  of  skill  is  necessary  to  the  performance.  Wherever 
this  is  required  and  the  party  employed  professes  to  possess 
all  that  is  essential  to  the  business,  and  undertakes  to  do  it 
for  hire,  he  will  be  held  responsible  for  the  exercise  of  such 
an  amount  of  it  as  is  necessary  for  the  accomplishment  of  his 
undertaking.  A  person  employs  a  mechanic  or  artisan  to 
erect  a  stove  in  a  shop,  and  lay  a  tube  under  the  floor  for 
the  pui-pose  of  carrying  off  the  smoke,  and  the  plan  fails. 
The  workman  is  entitled  to  no  compensation,  and  if  damages 
are  sustained  will  be  liable  for  them.  Duncan  v.  JBlundell, 
3  Starlc.  G.  The  degree  of  skill  and  diligence  required  is  by 
no  means  always  the  same.  It  rises  in  proportion  to  the 
value,  delicacy,  and  difficulty,  of  the  operation.  Nothing, 
however,  can  be  legally  demanded  beyond  the  ordinary 
skill  in  the  particular  business  or  employment  to  which  the 
person  employed  belongs.  This  has  been  the  most  fre- 
quently illustrated  in  questions  arising  out  of  surgical  oper- 
ations. The  rule  here  is,  that  the  physician  or  sm-geon 
must  apply,  without  mistake,  what  is  settled  in  his  profes- 
sion. The  standard  of  ordinary  skill  required  is :  "  that 
degree  and  amount  of  knowledge  and  science,  which  the 
leading  authorities  have  pronounced  as  the  result  of  their 
researches  and  experience,  up  to  the  time,  or  within  a  rea- 
sonable time,  before  the  issue  or  question  to  be  determined 
is  made."  Leighton  v.  Sargent.,  7  Foster.,  460.  A  different 
rule  however  prevails  where  the  bailee,  or  person  employed, 
does  not  profess,  and  is  known  not  to  possess,  the  skill  and 
knowledge  required  for  an  operation  ;  but,  nevertheless,  is 
employed  on  some  sudden  emergency.  All  he  is  responsible 
for  is  the  reasonable  exercise  of  the  skill  and  knowledge  he 
may  actually  possess. 

§  478.  Tlie  question  still  remains  as  to  the  rights  of  the 
bailee,  or  person  employed,  where  the  work  has  failed  of 


CASE  WHEEE  PERFORTVrAXCE  IS  CONDITION  PKECEDEXT.   257 

completion  through  his  own  neglect.  These  depend  upon 
the  nature  of  the  contract  into  which  he  has  entered.  If 
that  is  to  work  by  the  day,  he  will  be  entitled  to  recover 
wliat  his  work  is  fairly  w^orth,  after  deducting  all  damages 
occasioned  by  his  default.  But  if  his  work  is  done  under 
an  entire  contract,  special  in  its  provisions,  he  will  have  to 
abide  by  its  precise  terms.  A  builder  enters  into  a  contract 
to  erect  a  building  upon  the  land  of  another.  The  per- 
formance is  to  precede  pajTuent,  and  is  a  condition  thereof. 
The  builder  substantially  fails  to  perform  on  his  part,  but 
performs  so  far  that  the  owner  and  employer  occupies  and 
enjoys  the  erection.  Held,  that  the  bailee  can  recover 
nothing  for.  his  labor  and  materials.  Tliat  the  bailor,  or 
employer,  in  such  a  case,  may  retain  without  compensation, 
the  benefits  of  a  partial  performance,  when  fsom  the  nature 
of  the  contract,  he  must  receive  such  benefits  in  advance  of 
a  full  performance,  and  is,  by  the  contract,  imder  no  obhga- 
tion  to  pay  until  the  completion  of  the  performance.  Smith 
V.  Brady,  17  l^eio  York  Itep.  173.  Wliere  work  is  done 
imder  a  special  contract  at  estimated  prices,  and  there  is  a 
deviation  from  the  original  plan  by  the  consent  of  the 
parties,  the  estimate  is  to  control  so  far  as  it  extends,  and 
for  the  extra  labor  the  bailee  is  to  receive  what  it  is  shown 
to  be  worth.  Dubois  v.  Delavxire  and  Hudson  Canal  Com- 
'pany,  4  Wend.  2S5.  Tlie  same  principles  prevail  here  as  in 
the  deposit  and  mandate  in  regard  to  the  return  of  the 
identical  thing  on  which  the  labor  and  services  have  been 
performed.  Tliese  must  guide  throughout,  and  distinguish, 
every  where,  cases  of  bailment  from  those  of  sale. 

§  479.  There  is  another  division  under  this  species  of 
bailment  tenned  deposit  for  hi?\',  embracing  warehouscmeriy 
forwarding  merchants,  wharfingers,  &c.,  in  which  the  con- 
tract is  also  for  the  mutual  benefit  of  both  parties,  requiring 
ordinary  care  and  diligence,  and  rendering  responsible  for 
ordinary  neglect.  These  require  no  special  consideration 
here.  But  there  is  another  class  extensive  and  peculiar  from 
17 


258  INNKEErEK,    GUEST,   AND   BOAKDEK. 

any  liitlierto  considered  as  to  tlic  liabilities  involved,  which 
require  more  consideration.  Tliis  is  the  class  of  Innkeepers, 
whose  liabilities,  from  motives  of  public  policy,  are  far  more 
severe  than  any  other  bailees  except  common  carriers. 

§  480.  An  innkeeper  is  defined  to  be  the  keeper  of  a 
common  inn  for  the  lodging  and  entertainment  of  travellers 
and  passengers,  their  horses  and  attendants,  for  a  reasonable 
compensation.  Tlie  inn  which  he  keeps  is  defined  to  be  a 
house,  where  the  traveller  is  furnished  with  every  thing  he 
has  occasion  for  whilst  on  his  way.  An  innkeeper  differs 
from  the  keeper  of  a  boarding-house,  in  that  the  former 
holds  himself  out  to  the  public  as  ready  and  willing  to  re- 
ceive all  travellers  or  wayfarers  that  desire  accommodations 
for  such  a  compensation  as  shall  be  just  and  reasonable ; 
while  the  latter  keeps  only  select  persons,  usually  making 
with  each  a  special  contract.  In  the  State  of  !New  York, 
and  in  most  other  States  of  the  Union,  there  are  statute 
regulations  applying  to  inns  and  taverns.  In  order  to  con- 
stitute them  such,  they  must  be  licensed  by  the  commis- 
sioners of  excise  ;  and  the  special  privileges  thus  conferred 
constitute  the  keeping  a  public  house  a  kind  of  j)ersonal 
trust,  which  is  not  susceptible  of  assignment,  so  as  to  convey 
any  rights  and  privileges  to  another. 

§  481.  There  is  also  a  corresponding  dift'erence  between 
the  guest  of  an  inn,  and  the  boarder  or  lodger  of  a  board- 
ing-house. Tlie  former  is  a  traveller,  passenger,  wayfaring 
man,  not  a  friend  or  neighbor.  The  length  of  time  he  re- 
mains there,  whether  an  hour  or  a  month,  has  no  effect  in 
determining  his  character.  K  he  takes  lodging  leaving  his 
horse  there,  and  then  goes  elsewhere  to  lodge,  he  is  still  a 
guest.  The  boarder  or  lodger  becomes  such  by  the  contract 
made  with  the  keeper  of  the  boarding-house,  and  if  he 
comes  to  an  inn  under  a  special  contract  to  board  and  so- 
journ there,  he  is  simply  a  boarder,  and  not  a  guest.  A 
guest  is  not  created  by  simply  leaving  goods  at  an  inn  for 
which  no  compensation  is  paid.    Gelley  v.  Clarice^  Cro.  Jac. 


LIABILITY   OF  INNKEEPER.  259 

188.  Tlie  rights,  duties,  responsibilities,  and  remedies  ap- 
plying to  the  innkeeper  and  his  guest,  and  to  the  boarding- 
house  keeper  and  his  boarder,  are  wholly  different  in  their 
origin,  nature,  and  character.  Tlie  latter  are  mainly  gov- 
erned by  the  contract  into  which  the  parties  enter,  while 
the  former  are  left  to  the  principles  of  the  common  law. 

§  482.  As  the  innkeeper  makes  a  standing  offer  to  the 
public  to  accommodate  all  who  call  upon  him  for  that  pur- 
pose, he  is  bound  to  receive  as  guest,  and  to  entertain,  as 
far  as  his  accommodations  extend,  all  such  ordinary  travel- 
lers as  may  desire  to  avail  themselves  of  his  offer.  By 
improperly  refusing,  he  may  subject  himself  to  an  action. 
He  is  not,  however,  obliged  to  receive  or  retain  a  guest  who 
conducts  himself  disorderly,  nor  any  one  having  an  infec- 
tious disease,  nor  any  one  who  would  endanger  the  safety 
of  his  guests.  The  principal  contract  with  the  innkeeper 
relates  to  the  accommodations  of  his  guests ;  but  as  acces- 
sorial to  that,  is  also  included  the  receiving  and  safe  keeping 
of  the  baggage ;  this  he  is,  also,  bound  to  receive,  and 
cannot  refuse  to  take  charge  of,  because  of  suspected  persons 
in  the  inn  for  whose  conduct  he  is  not  willing  to  be  respon- 
sible, lie  is  under  no  obligation  to  entertain  such  persons 
at  the  inn. 

§  483.  The  liability  of  the  innkeeper  was  early  estab- 
lished. In  Calye^s  case.,  8  Coke,  63,  it  was  said  that  by  the 
custom  of  the  realm,  innkeepers  are  obliged  to  keep  the 
goods  and  chattels  of  their  guests,  which  are  within  their 
inns,  without  subtraction  or  loss,  day  and  night,  so  that  no 
damage,  in  any  manner  shall  thereby  come  to  their  guests, 
from  the  negligence  of  the  innkeeper  or  his  servants.  It 
was  held  in  this  case,  that  if  a  guest  come  to  an  inn  and 
direct  that  his  horse  be  put  to  pasture,  and  tlie  horse  be 
stolen,  the  innkeeper  is  not  responsible.  But  it  was  agi'ced 
that  if  the  owner  had  not  directed  that  the  horse  be  put  to 
pasture,  and  the  innkeeper  had  done  it  of  his  own  accord, 
he  would  be  responsible.    In  a  more  recent  case,  the  travel- 


2G0  LIABILITY  OF  INNKEEPER 

ler  directed  his  horse  to  be  put  into  tlic  etable,  and  himself 
and  some  goods  was  received  into  the  inn.  His  gig  was 
placed  by  the  innkeeper  in  an  open  street,  without  the  yard, 
and  where  he  was  often  accustomed  to  place  gigs.  It  was 
stolen,  and  the  innkeeper  was  held  liable,  although  it  was 
stated  that  this  was  on  the  extreme  limit.  Jones  v.  Tyler^ 
1  Adol.  <&  Ellis,  522.  See  also  JlallenhaJce  v.  Fish,  8 
Wend.  647,  in  which  a  horse  was  delivered  to  the  ostler  at 
an  inn  to  be  fed,  and  the  ostler  took  off  the  saddle  and 
bridle,  and  left  them  in  a  barn  belonging  to  the  inn,  and 
they  were  stolen.  The  innkeeper  was  held  responsible. 
Also  Clute  V.  Wiggins,  14  John.  175.  In  Bennct  v.  Mellor, 
5  Term.  Hep.  274,  a  servant  of  the  plaintiff  came  to 
deposit  some  goods  at  the  inn,  which  the  innkeeper  de- 
clined receiving.  Tlie  servant  sat  down  in  the  inn  as  a 
guest  with  the  goods  behind  him,  and  they  were  stolen. 
Held,  the  innkeeper  was  responsible. 

§  484.  It  is  not  necessary  to  show  a  delivery  to  the  inn- 
keeper in  order  to  charge  him.  Goods  stolen  from  Ij^e 
chamber  of  the  guest  in  the  inn,  the  innkeeper  having  had 
no  notice  of  them,  will  nevertheless  render  him  liable.  IsTor 
would  it  divest  of  liability  if  the  guest  had  himself  the 
key  of  the  chamber  in  which  he  lodged,  and  left  the  door 
open.  But  if  the  guest  be  required  to  put  his  goods  in  a 
particular  chamber  under  lock  and  key,  otherwise  their 
safety  would  not  be  warranted,  and  it  is  not  done,  and  they 
are  stolen,  the  innkeeper  is  not  responsible.  The  responsi- 
bility of  the  innkeeper  extends  also  to  his  servants  and 
domestics,  and  to  those  who  are  sojourning  at  the  inn.  The 
innkeeper  ceases  to  be  responsible  if  the  guest  takes  upon 
himself  exclusively  the  custody  of  his  own  goods,  or  if  he 
has,  by  his  own  neglect,  exposed  them  to  the  peril  that  re- 
sults in  their  loss.  Thus  if  he  deposits  them  in  a  room, 
making  use  of  it  as  a  warehouse,  having  the  exclusive  pos- 
session of  it,  and  they  are  stolen,  the  innkeeper  is  not  re- 
sponsible.   Famworth  v.  PacTcioood,  1  StarTc.  249.     Or  if. 


LIABILITY   OF   CJNEEEPEE.  261 

instead  of  confiding  tlie  goods  to  an  innkeeper,  he  commits 
tliem  exclusively  to  tlie  custody  of  another  person  who  is 
living  at  the  inn  ;  the  innkeeper  is  not  liable  in  case  of  loss. 
Sneider  v.  Geu^,  1  Yeates,  34:. 

§  485.  Tlie  extent  of  the  innkeeper's  responsibility  for 
the  goods  of  his  guest  is  not  yet  entirely  settled.  He  is  not 
liable  for  trespasses  committed  upon  the  person  of  the  guest, 
and  was  formerly  held  exonerated  from  losses  occasioned  by 
inevitable  casualty,  or  by  superior  force,  as  by  robbery. 
But  the  policy  of  the  law  has  been  steadily  holding  to  a 
stricter  degree  of  responsibihty,  imtil  at  the  present  time 
they  are  placed  substantially  upon  the  footing  of  common 
carriers,  and  held  to  be  insurers  of  the  goods  of  their  guests 
except  in  case  of  loss  by  the  act  of  God,  and  the  public 
enemy.  Eichinond  v.  Smith,  8  Barn.  <&  Cress.  9  Mason  v. 
Thompson,  9  Pick.  280.  Tlio  authority  of  this  last  case, 
however,  is  overruled  in  Grinnel  v.  Coolc,  3  Hill,  485,  so  far 
as  it  holds  the  innkeeper  responsible  for  the  goods  of  a  per- 
son who  was  not  at  the  inn,  and  not,  therefore,  a  guest. 
The  character  of  guests  must  always  be  first  established 
before  the  innkeeper  can  be  held  responsible  for  his  prop- 
erty. 

§  486.  Another  point  of  interest  and  difficulty  has  arisen, 
and  that  is  to  determine  what  character  of  goods  this  extra- 
ordinary extent  of  liability  shall  attach  to.  Shall  it  be 
limited  simply  to  the  baggage  a  traveller  ordinarily  carries 
with  him,  or  shall  it  embrace  all  goods  he  may  have  in  his 
custody  ?  There  is  a  conflict  in  the  cases  upon  this  pomt. 
The  Berkshire  Woollen  Company  v.  Proctor,  7  Cush.  417, 
holds,  that  the  liability  of  the  innkeeper  for  loss  by  his 
guest  extends  to  all  th(?  movable  goods  and  money  which 
are  placed  within  the  inn,  and  is  not  restricted  to  such 
things  and  sums  only,  as  are  necessary  for  ordinary  travel- 
ling convenience  and  expenses.  But  in  Simon  v.  Miller,  7 
Louis.  360,  it  is  hold  that  an  iimkeeper  is  responsible  only 
for  usual  and  ordinary  baggage,  and  not  for  unknown  treas- 


262  ON    WHOM   IS   TUE   BUEDEN   OF   TKOOF.     . 

ure  belonging  to  tlie  traveller.    Tliis  may,  therefore,  still  bo 
regarded,  to  some  extent,  as  an  open  question. 

§  487.  One  more  topic  only  remains  under  this  head,  and 
that  is  the  inquiry  as  to  the  burden  of  proof.  The  guest 
makes  out  his  case  by  proving  the  defendant  to  be  tho 
keeper  of  a  public  inn,  that  he  was  there  in  the  character 
of  a  guest,  and  that  while  there  in  such  character,  his  goods, 
being  baggage,  were  lost.  The  burden  of  proof  is  then 
upon  the  defendant,  the  fact  of  loss  being  itself  presumptive 
evidence  of  negligence  on  the  part  of  the  iiinkeej)er  or  of 
his  domestics.  He  may  show  that  the  loss  came  within  the 
excepted  cases  of  the  act  of  God  or  the  public  enemy  ;  or 
that  the  guest  was  robbed  by  his  own  servant ;  or  by  one 
who  came  to  the  inn  as  his  companion  ;  or  that  the  loss  oc- 
curred through  his  own  negligence. 

QUESTIONS. 

How  is  the  contract  of  hiring  defined  ?  "What  does  it  cover  ?  What 
does  it  include  ?  Who  are  parties  in  the  hire  of  things  ?  What  is  the 
contract  ?  What  quahfications  to  the  thing  hired  ?  What  in  regard  to 
time  and  purpose  ?  What  must  the  thing  be  adapted  to  ?  What  must 
be  the  right  of  the  hirer  ?  What  is  there  to  secure  him  this  ?  What 
are  the  qualities  of  price  ?  What  essential  as  to  the  purpose  for  which 
the  thing  is  to  be  used  ?  What  are  the  duties  of  the  letter  to  hire  ? 
What  the  difference  whether  defects  are  known  or  unknown  to  hkn  ? 
What  is  the  principle  that  governs  repairs,  and  warranty  against  de- 
fects ?  What  interest  has  the  hirer  in  the  thing  ?  What  has  he  pur- 
chased ?  What  his  duty  as  to  employment  of  the  thing  ?  What  the 
consequences  of  putting  it  to  a  different  use  or  purpose  ?  For  whose 
benefit  is  this  species  of  bailment  ?  What  is  the  hirer  bound  for  ?  What 
will  exonerate  ?  When  is  there  no  liability  ?  What  illustration  ?  What 
the  rule  as  to  restoration  ?  And  in  what  condition  ?  How  may  this 
contract  be  terminated  ?  What  is  another  species  of  hiring  ?  Where 
does  this  properly  apply?  What  questions  arise  when  the  thing  perishes 
or  is  destroyed  1  What  does  the  risk  of  loss  usually  follow  ?  How  may 
the  workman,  by  his  contract,  assume  the  risk  of  loss  ?  How  otherways 
may  he  assume  such  risk  ?  For  whose  benefit  is  this  contract  ?  What 
should  the  law  require?  When  is  something  beyond  ordinary  care  and 
diligence  required?    What  is  the  rule  where  the  party  professes  the 


QUESTIONS.  263 

skill,  and  undertakes  for  Lire  ?  What  illnstration  ?  How  does  the  skill 
and  diligence  required  vary  ?  What  is  the  limit  of  requirement  ?  What 
illustrated  in  ?  What  is  the  rule  of  liability  in  surgical  operations  ? 
What  the  standard  of  skill  ?  What  the  rule  when  the  person  employed 
does  not  profess,  and  is  known  not  to  possess,  the  necessary  skill  and 
knowledge  ?  When  the  work  has  failed  through  neglect  of  the  bailee, 
what  do  his  rights  depend  upon  ?  What  the  rule  if  work  is  to  be  done 
by  the  day  ?  What  if  done  under  an  entire  contract  having  special 
provisions  ?  What  illustration  ?  What  the  principle  extracted  ?  What 
the  principle  as  to  the  return  of  the  identical  thing? 

How  is  an  innkeeper  defined  ?  How  is  an  inn  defined  ?  What  is 
the  difference  between  an  innkeeper  and  a  boarding-house  keeper  ? 
How,  in  most  of  the  States,  are  inns  and  taverns  regulated  ?  What  docs 
the  license  convey?  How  is  it  regarded?  What  not  susceptible  of? 
What  is  the  difference  between  the  guest  at  the  inn,  and  the  boarder  at 
a  boarding-house?  Does  length  of  time  make  any  difference?  How 
does  a  boarder  or  lodger  "become  such  ?  Does  a  guest  become  such  by 
leaving  goods  at  an  inn  ?  Are  the  innkeeper  and  boarding-house  keeper 
alike  as  to  rights,  duties,  &c.  ?  What  are  those  of  boarding-house 
keeper  governed  by  ?  What  the  duty  of  the  innkeeper  as  to  receiving 
and  entertaining  guests?  What  the  result  of  improperly  refusing? 
Who  may  he  refuse  to  receive  ?  To  what  does  the  principal  contract 
with  the  innkeeper  relate  ?  What  does  it  draw  after  it  as  accessorial  ? 
Will  suspected  persons  at  the  inn  justify  him  in  refusing  to  take  charge 
of  baggage  ?  Why  ?  What  was  the  principle  settled  in  Calye's  case  ? 
What  in  the  more  recent  case  of  Jones  v.  Tyler  ?  And  in  Bennet  v. 
Mellor  ?  Is  it  necessary  to  show  delivery  to  the  innkeeper  to  charge 
him  ?  How  when  goods  are  stolen  from  chamber  of  guest  ?  How  if 
guest  have  the  key  ?  How  can  innkeeper  render  himself  irresponsible  ? 
What  docs  responsibility  of  innkeeper  extend  to  ?  When  docs  the  inn- 
keeper cease  to  be  responsible  ?  What  illustrations  ?  For  what  is  an 
innkeeper  not  liable  ?  What  has  been  the  policy  of  the  law  ?  On  what 
footing  is  an  innkeeper  now  placed,  and  how  held  ?  What  is  necessary 
before  innkeeper  can  be  held  for  goods  ?  What  is  the  limit  of  liability 
— is  it  limited  to  baggage  or  does  it  extend  to  money  and  goods?  What 
must  the  guest  prove  to  make  out  his  case  ?  Where  is  next  the  burden 
of  proof?  What  is  the  fact  of  loss  presumptive  evidence  of?  What 
may  the  innkeeper  show  in  defence  ? 


2G4  WIIAT  AUB   WUO  AKE  COMMON   CAEKIEKS. 

PART  vn. 

OF  THE    COMMON   CABEIEE. 

§  488.  A  common  carrier  is  one  who  undertakes,  for 
hire,  to  transport  the  goods  of  such  as  choose  to  employ 
him,  from  place  to  place.  Two  necessary  elements  enter 
into  the  comiDosition  of  the  earner. 

1.  He  makes  a  continual  offer  to  the  public  to  carry  all 
goods  confided  to  him  for  that  purpose,  that  come  within  his 
proj^osed  line  of  business.  It  is  this  that  renders  him  the 
comrnoii  carrier.  In  this  resj)ect  he  difi'ers  from  those  who 
carry  only  when  they  make  special  contracts,  and  who  do 
not  offer  themselves  to  the  public  to  carry  for  all  indiscrimi- 
nately who  choose  to  employ  them. 

2.  He  charges  a  reasonable  compensation  for  the  risks 
incurred,  and  the  labor  and  services  performed  in  the  car- 
riage of  goods. 

§  489.  There  are,  in  this  country,  a  great  many  different 
kinds  of  common  carriers.  But  what  serves  to  define  them 
all,  and  set  them  apart  from  every  other  body  of  men,  is, 
that  they  all  carry  for  hire  without  entering  into  a  special 
contract  for  that  purpose.  All  truckmen,  teamsters,  cart- 
men,  who  make  it  their  regular  busmess  and  employment 
to  carry  goods  from  one  part  of  a  city  or  town  to  another, 
for  the  public  generally,  for  a  compensation,  are  common 
carriers.  So,  also,  are  the  proprietors  of  stage-coaches,  who 
carry  goods  for  hire,  holding  themselves  out  to  the  public 
as  ready  to  carry  for  all  persons  indifferently.  The  same 
principle  applies  also  to  the  proprietors  of  railroad  cars. 
Nor  is  it  limited  to  land  carriage.  The  canal-hoat,  carrying 
for  the  public,  for  hu*e,  comes  under  the  same  principle. 
So,  also,  is  the  steamloat^  when  employed  in  the  transporta- 
tion of  goods  as  well  as  persons  for  liire.  But  if  employed 
solely  in  the  transportation  of  passengers,  it  is  otherwise. 
An  interesting  question  has  arisen  in  this  coimtry  in  regard 


HOW  FAK  COMMON  CAEEIER  LIABLE.  265 

to  the  liability  of  a  steamboat  while  employed  in  the  towing 
of  a  freight  vessel,  and  it  was  held  that  it  was  not  a  com- 
mon carrier.  Eato7i  v.  Eumney,  13  Wend.  387  ;  Wells  v. 
Steam  Navigation  Co.^  2  Comst.  20'1.  The  point  was  for 
some  time  nndecided  whether  merchant  vessels  employed  in 
the  transportation  of  goods  beyond  sea,  were  to  be  regarded 
as  common  carriers,  imtil  finally,  after  much  consideration, 
it  was,  held  that  they  were,  in  Morse  v.  Slue^  1  Ventns^ 
190.  The  same  doctrine  is  now  understood  to  apply  equally 
to  vessels  plying  from  port  to  port  in  carrying  on  the  coast- 
ing trade,  and  also  to  bargemen  and  hoymcn  on  a  navigable 
river. 

§  490.  Questions  have  frequently  arisen  in  this  country 
in  cases  where  there  are  successive  companies  of  carriers 
over  a  continuous  line  of  travel,  and  no  partnership  relation 
existing  between  them.  The  point  of  difficulty  to  decide 
has  been  whether  the  carrier  who  receives  the  goods  is 
liable  for  their  loss  in  the  course  of  their  transit  by  another 
company.  A  package  of  goods  marked  for  Chicago  is  de- 
livered in  New  York  to  the  Hudson  Eiver  Tow-boat  Com- 
pany, who  deliver  it  in  good  order  to  the  New  York  Central 
Railroad,  and  while  being  carried  from  Albany  to  Buflfalo, 
it  is  lost.  Are  the  Hudson  River  Tow-boat  Company 
liable  ?  In  England  they  would  be  liable.  Muscliamp  v. 
Lancaster  &  Preston  Railway  Comimny.,  8  Mecs.  <&  Welsh. 
421.  Tlic  early  decisions  in  the  State  of  New  York  adopted 
the  English  rule.  Weed  v.  Schenectady  cO  Saixitoga  Rail- 
road Co.,  19  Wend.  534.  At  length  St.  John  v.  Van  Sanf- 
ford,  which  was  carried  to  the  Court  of  Errors  of  the  State 
of  New  York,  and  is  reported  in  G  Jlill,  158,  reversed  the 
doctrine,  and  established  the  principle,  that  common  carriers 
receiving  goods  to  transport  to  a  certain  place,  and  at  that 
place  transferring  them  in  the  ordinary  course  of  business 
to  a  responsible  common  carrier  bound  for  or  towards  the 
place  of  destination  of  the  goods,  and  they  are  lost  after 
being  so  transferred,  the  first  receivers  are  not  responsible  for 


2G6  LIAUILITY   OF   CAKKIEE  FOK   BAGGAGE. 

the  loss.  Ill  the  State  of  New  York  a  statute  passed  in  the 
case  of  railway  carriers  make  the  receiving  company  respon- 
sible, but  gives  it'  a  remedy  over  against  the  company  by 
whom  the  loss  occurred.  2  R.  S.  G93,  §  G7,  5th  Ed.  But 
it  is  cntii-ely  competent  for  a  number  of  different  railroad 
lines  running  a  continuous  route,  although  different  com- 
panies, and  chartered  by  different  States,  to  enter  into  an 
arrangement  between  themselves,  by  which,  at  either  tenni- 
nus,  passage  tickets  are  sold  and  baggage  checked  over  all 
the  roads,  and  any  passenger  receiving  such  check  for  the 
entire  route,  may,  in  case  of  loss,  recover  of  the  company 
of*  whom  the  ticket  was  purchased,  and  a  company's  agent 
selling  a  through  ticket  would  render  his  company  respon- 
sible in  case  of  loss.  And  the  validity  of  such  contract  will 
not  be  affected  by  the  fact  that  it  requires  in  its  performance 
the  action  of  other  railroad  companies  incorporated  by  the 
acts  of  other  States.  Gary  v.  The  Cleveland  &  Toledo 
Railroad  Co..,  29  Barh.  35. 

§  491.  A  carrier  of  money  may  be  equally  liable  for  its 
loss  as  one  of  goods,  if  that  be  the  common  usage  of  the 
business  in  which  he  is  engaged,  and  it  is  known  to  be  his 
practice  to  take  charge  of  it  for  conveyance.  Thus  the 
proprietors  of  a  stage-coach  acting  as  common  carriers,  and 
making  a  profit  by  the  carriage  of  bank  bills,  that  being 
within  the  scope  of  their  business,  were  held  liable  for  loss 
as  common  carriers.     Dioight  v.  Brewster.,  1  Pich.  50. 

§  492.  Another  point  in  regard  to  which  there  has  been 
some  diversity  of  decision  relates  to  the  carrier's  liability 
for  the  usual  baggage  taken  by  travellers  on  board  stage- 
coaches, railroad  cars,  and  steam-boats.  The  early  decisions 
were  adverse  to  holding  the  common  carrier  responsible 
unless  a  distinct  price  was  paid  for  it.  Middleton  v.  Fowler, 
1  Salh.  2S2.  But  the  custody  of  the  baggage  finally  came 
to  be  regarded  as  accessory  to  the  principal  contract,  viz.  the 
carriage  of  the  passenger  ;  and  thus  the  liability  of  the  car- 
rier, as  carrier  for  it's  safe  carriage  and  delivery  was  clearly 


COiEMENCEiCEXT  OF  CAEEIEE's   LIABILITY.  267 

established.  Hawkins  v.  Hoffman^  6  Hill,  5SG.  Powell  v. 
Myers,  26  Wend.  591.  This  liabilitj,  however,  is  limited  to 
ordinary  baggage,  such  as  travellers  usually  carry  with  them 
for  their  pleasure  and  personal  convenience.  A  large  sum 
of  money  carried  in  a  trunk  and  lost,  cannot  be  recovered 
under  the  terra  baggage.  Orange  County  Bank  v.  Brown^ 
9  Wend.  85.  There  is  also  another  hmitation,  and  that  is, 
the  baggage  must  be  placed  under  the  charge  of  the  carrier, 
for  if  it  remains  in  the  exclusive  custody  and  possession  of 
the  passenger,  the  carrier  is  not  responsible.  Cohen  v. 
Frost,  2  Duer,  335. 

§  493.  The  carrier,  by  reason  of  his  employment,  and 
the  standing  offer  he  is  continually  making  to  the  pubhc,  to 
receive  and  carry  all  goods  committed  to  him  for  that  pur- 
pose, places  himself  under  obligation,  if  his  vehicle  is  not 
full,  to  act  upon  every  acceptance  of  his  offer,  and  thus  to 
receive,  for  the  purpose  of  transportation,  all  goods  of  the 
nature  of  those  embraced  in  his  line  of  business,  which  are 
tendered  to  him  for  that  purpose.  If  he  declines  doing  so, 
except  because  of  his  inability  to  carry  them,  or  of  their 
being  a  different  kind  of  goods  from  those  he  is  accustomed 
to  carry,  he  renders  himself  liable  to  an  action  for  damages. 
But  the  owner  of  the  goods,  when  offered  to  the  carrier,  should 
be  careful  to  tender,  at  the  same  time,  the  price  of  trans- 
portation ;  because  the  carrier  is  not  legally  bound  to  re- 
ceive them  without  prepayment  of  his  hire. 

§  494.  The  carrier's  liability  commences  from  that  point 
at  which  there  is  a  full  and  complete  delivery  of  the  goods 
to  him  to  be  carried  ;  and  where  he  directs  them  sent  to  a 
particular  booking  office,  he  becomes  liable  from  the  time 
of  their  arrival  and  receipt  at  the  office.  Camden  d;  Am- 
Ooy  Railroad  and  Transportation  Co.  v.  Belknap,  21  Wend. 
354.  The  carrier's  liability  is  fixed  by  the  acceptance  of 
the  goods  for  the  purpose  of  transportation,  wherever  that 
may  be,  but  some  kind  of  acceptance  is  indispensable,  and 
hence  when  a  passenger  having  placed  his  overcoat  on  the 


2G8  EXTENT  OF   CAERTEr's   LIABILITY. 

6cat  of  the  car  on  wliicli  he  sat,  left  it  there,  and  it  was 
afterwards  stolen,  it  was  held  the  carrier  was  not  liable. 
Tower  v.  TJtica  &  Schenectady  Railroad  Co.^  7  Hill,  47. 
It  is  a  sufficient  delivery  to  a  canal-boat  carrier  to  leave  the 
goods  by  or  near  the  boat,  according  to  the  usage  of  busi- 
ness, provided  express  notice  thereof  be  given  to  the  master. 
Tlie  delivery  to  an  authorized  servant  or  agent  who  is  in  the 
habit  of  receiving  packages  is  sufficient.  Evidence  of  a 
constant  usage  by  the  carrier  to  receive  goods  left  at  a  cer- 
tain 2)lace,  will  be  sufficient  to  render  him  responsible  for 
goods  left  at  such  place. 

§  495.  Having  determined  who  are  common  carriers, 
what  are  their  obligations  as  to  receiving  goods  to  carry, 
and  what  acceptance  charges  them  with  the  goods,  the  next 
point  of  inquiry  relates  to  the  liabilities  they  place  them- 
selves under,  in  the  transportation  and  delivery  of  the 
property.  Tlie  general  principle  may  be  stated  to  be :  that 
the  common  law  makes  the  common  carrier  liable  as  an  in- 
surer of  the  goods  he  transports  against  all  loss  and  damage 
except  what  is  caused  by  the  act  of  God  and  the  public 
enemy.  "  This,"  says  Lord  Holt,  "  is  a  politic  establishment, 
contrived  by  the  policy  of  the  law,  for  the  safety  of  all 
persons,  the  necessity  of  whose  affairs  obliges  them  to  trust 
these  sorts  of  persons,  that  they  may  be  safe  in  then*  deal- 
ings. For  else  these  carriers  might  have  an  opportunity  of 
undoing  all  persons,  that  had  any  dealings  with  them,  by 
combining  with  thieves,  &c.,  and  yet  doing  it  in  such  a 
clandestine  manner,  as  would  not  be  possible  to  be  dis- 
covered." Tliis  severe  rule  of  liability  has  had  its  many 
cases  of  individual  hardship,  and  many  and  strenuous  have 
been  the  efforts  under  some  form  or  pretence  to  escape  from 
its  pressure. 

§  496.  The  first  point  of  inquiry  that  properly  arises 
here,  relates  to  the  Aieaning  of  the  phrase,  "  act  of  God." 
Wliat  is  to  be  regarded  strictly  as  "  an  act  of  God."  It  is 
held  not  to  be  identical  with  "  inevitable  accident,"  but  has 


WHAT  IS  AN   "act  OF  GOD."  2G9 

been  styled  a  "  natural  necessity,"  such  as  storms,  winds, 
&c.  The  clearest  idea  may  probably  be  got  of  it  in  its 
legal  sense,  as  applying  to  common  carriers,  by  considering 
it  as  meaning  sometJiing  tVi  opposition  to  the  act  of  man. 
And  in  all  cases  of  loss  wliere  the  agent  of  destruction  has 
clearly  been  something  that  no  human  po^ver  has  produced, 
or  set  in  motion,  it  is  then  to  be  attributed  to  the  "  act  of 
God."  Some  illustrations  will  point  the  application  of  this 
proposition.  There  is  a  sudden  failure  of  the  wind  by  means 
of  which  a  vessel  tacking  is  unable  to  change  her  tack,  and 
so  is  driven  ashore.  Held,  an  "  act  of  God."  Colt  v. 
McMahcn,  6  John.  160. 

Goods  are  burnt  in  a  booth,  the  fire  having  originated 
one  hundred  yards'  distance,  and  no  negligence  proved 
against  the  defendant.  Held,  that  the  fire  arose  from  an 
act  of  man,  and  the  carrier  was  liable.  Forward  v.  Piitard,, 
1  Term.  Bep.  27. 

Destruction  by  lightning,  and  the  freezing  of  canals 
and  rivers,  are  regarded  as  "  acts  of  God."  The  rule  is  to 
render  the  carrier  liable  wherever  the  act  of  man  is  traceahle, 
and  hence  where  an  injury  was  done  to  a  cargo  by  the  steam 
which  escaped  through  a  crack  in  the  steam  boiler  occa- 
sioned by  the  frost,  the  can-ier  was  held  liable. 

§  497.  The  phrase  "  perils  of  the  seas,"  often  occurs  and 
is  used  as  synonymous  with  "  acts  of  God."  It  includes 
losses  by  pirates,  and  by  collision  of  vessels  where  no  blame 
is  imputable  to  the  injured  ship.  The  phrase  "  dangers  of 
the  river,"  has  also  come  up,  and  has  been  considered  by 
some  as  embracing  the  same  as  "  perils  of  the  seas,"  while  by 
others  it  has  been  regarded  as  more  extensive,  covermg  losses 
occasioned  by  hidden  obstructions,  newly  placed  there,  and  of 
a  character  such  that  human  skill  or  foresight  could  not  have 
discovered  or  avoided.     Gordon  v.  Buchanan^  5  Yerg.  71. 

§  498.  A  common  carrier  may  become  liable  for  an 
injury  caused  by  an  "  act  of  God,"  if  he  voluntarily  and 
improperly  encounters  the  mischief ;  as  where  a  barge  mas- 


270  WUO   IS   A   PUBLIC   ENEMY. 

ter  rashly  shoots  a  bridge  -when  the  bent  of  the  weather  is 
tempestuous,  and  a  loss  occurs  in  consequence.  Araies  v. 
Stevens,  1  Strange,  128.  So  a  loss  occurring  in  conse^ 
quence  of  a  deviation  from  the  regular  course  of  a  voyage 
at  sea  will  subject  to  liability ;  as  -where  the  navigation 
of  Long  Island  Sound,  being  obstructed  by  ice,  the  car- 
rier vessel,  instead  of  going  through  it,  performed  her 
voyage  in  the  open,  sea,  on  the  south  side  of  Long  Island. 
This  was  held  a  deviation  which  rendered  the  carrier  liable 
for  a  loss  occasioned  by  the  perils  of  the  sea  ;  but  the  court 
distinguishes  between  this  and  the  case  of  a  vessel  already 
on  her  voyage,  and  while  in  transitu  is  compelled  by  a  like 
obstruction  to  deviate  from  her  course.  Crosby  v.  Fitch,  12 
Conn.  410.  So,  also,  a  railroad  corporation  is  held  respon- 
sible for  damages  resulting  from  a  delay  to  transport  freight 
in  the  usual  time  which  was  caused  by  a  great  number  of 
its  servants  suddenly  and  wrongfully  refusing  to  work.  As 
where  a  large  proportion  of  the  engineers  on  a  railroad,  sud- 
denly and  by  concert  abandon  their  engines  for  the  purpose 
of  compelling  the  company  to  rescind  a  reasonable  regula- 
tion. Blackstock  v.  The  New  York  &  Erie  Railroad  Co.,  20 
New  York  Rep.  481. 

And  so  also  where  there  was  a  failure  to  transport  a 
passenger  with  proper  despatch,  owing  to  the  wilful  act  of 
the  conductor  in  charge  of  the  train  ;  it  being  held  wholly 
immaterial  whether  a  breach  of  contract  results  from  the 
negligence  or  the  wilfulness  of  the  earner's  agent  if  his  act 
is  within  the  scope  of  his  emplyment  and  authority.  Weed 
V.  The  Panama  Railroad  Co.,  17  Neio  York  Rep.  362. 

§  499.  The  other  exception  is  that  of  the  "  public  enemy," 
which  is  restricted  to  enemies  with  whicb  the  State  is  at 
war,  and  to  pirates  on  the  high  seas ;  these  latter  being 
considered  the  enem-ies  of  all  mankind.  It  does  not  apply 
to  losses  occasioned  by  thieves,  rioters,  robbers,  armed  mobs, 
or  insurgents.  The  carrier  is  in  all  cases  liable  unless  the 
loss  has  arisen  through  the  operation  of  one  of  these  two 


LIABILITY  m  THE  DAMAGE  OF  AXIMALS.  271 

causes,  tlie  proof  of  wliicli  in  exoneration  always  lies  upon 
the  carrier.  The  merchant  or  owner  shows  the  delivery  to 
him  to  carry,  and  that  they  never  reached  the  consignee,  or 
even  stopping  with  the  delivery  will  charge  the  carrier  with 
the  goods,  and  devolve  upon  him  the  necessity  of  showing 
something  in  discharge.  If  a  loss  occurred  through  either 
of  the  causes  specified  he  is  bound  to  show  it,  or,  if  he  does 
not,  to  stand  the  loss.  K  the  loss  must  have  happened  to 
goods  on  board  a  vessel  without  the  misconduct  by  which 
it  was  occasioned,  the  common  carrier  would  not  be  held 
liable.  As  where  goods  were  improperly  stowed  on  the 
deck  of  a  sliip,  and  are  washed  away  by  the  storm.  The 
owner  of  the  ship  held  liable  for  the  loss,  although  caused 
by  the  perils  of  the  sea,  unless  the  danger  were  such,  as 
would  equally  have  occasioned  the  loss,  if  the  goods  had 
been  safely  stowed  under  deck.  Crane  v.  The  Mebecca,  6 
Am.  Jurist.  1. 

§  500.  A  question  has  been  raised  as  to  the  liability  of 
the  carrier  when  he  enters  upon  the  carriage  of  animals, 
and  a  loss  occurs.  He  was  formerly  held  responsible  in  the 
same  manner  as  a  carrier  of  merchandise.  Stuart  v.  Craw- 
ler/, 2  Stark.  323.  The  point  has  recently  come  up  in  the 
Com-t  of  Appeals  of  the  State  of  Kew  York  in  the  case  of 
Clarice  v.  The  Rochester  <&  Syracuse  Railroad  Co.  4  Kern, 
570,  in  which  it  was  held  that  the  liability  of  a  common 
carrier  of  animals  is  not,  in  all  respects,  the  same  as  that 
of  a  carrier  of  inanimate  property.  But  the  liability  of  a 
railroad  company,  engaged  as  a  common  carrier  of  animals, 
is  not  limited  to  the  careful  and  safe  conveyance  of  the  car 
containing  thena.  The  company  is  responsible  for  any  in- 
jury which  can  be  prevented  by  foresight,  vigilance,  and 
care,  although  arising  from  the  conduct  of  the  animals.  But 
he  is  not  an  insurer  against  injuries  arising  from  the  nature 
and  properties  of  the  animals,  and  which  diligent  care  can- 
not prevent. 

§  501.  The  strictness,  extent,  and  severity  of  the  com- 


272  EIGHT  OF  EESTKICTmO  LIABILITY. 

inon  carrier's  liability  has  led  to  frequent  attempts  on  his 
part,  to  limit,  restrict,  qualify,  or  restrain  it,  whicli  have 
generally  been  ultimately  successful.    It  seems  to  have  been 
early  conceded  in  England  that  the  right  was  possessed  of 
making  special  acceptances  in  limitation  of  liability.    In  this 
country  the  point  has  several  times  been  presented,  gene- 
rally in  the  form  of  a  notice  given  to  the  passenger  that 
"  all  baggage  was  at  the  risk  of  the  owner,"  and  in  such 
cases  the  law  was  very  clearly  settled  that  the  carrier's  lia- 
bility was  not  thereby  restricted.     Jlollister  v.  Nolen,  19 
Wend.  23tJl:.     Cole  v.   Goodwin,  19  Wend.  251.     Gould  v. 
Hill,  2  Hill,  623.     At  the  same  time  several  dicta  of  the 
judges  went  to  the  extent  of  denying  that,  upon  grounds 
of  public  policy,  the  common  carrier  could,  ly  any  means 
whatever,  limit  a  responsibility  which  the  law,  for  wise  rea- 
sons, had  cast  upon  him.    The  question  finally  went  to  the 
Court  of  Appeals  of  the  State  of  New  York  in  Dorr  v. 
The  New  Jersey  Steam  Navigation  Company,  1  Kern.  485, 
in  which  it  was  held  that  although  a  notice  brought  home 
to  the  other  party  would  not  have  the  effect  of  restricting 
liability,  yet  that  it  was  competent  for  the  coinmon  earner, 
hy  entering  into  a  special  contract,  to  limit  it  within  nar- 
rower bounds  than  those  prescribed  by  the  law.    The  power 
of  limiting  by  a  special  contract,  stands  now,  therefore,  ad- 
mitted, but  that  by  notice,  though  brought  to  the  knowledge 
of  the  owner,  denied.    But  ought  not  the  latter  to  be  evidence 
of  such  a  special  acceptance  as,  under  the  English  decisions, 
would  amount  to  a  limitation  ?     In  States  other  than  New 
York,  the  decision  has,  in  many  instances,  been  adverse  to 
the  right  of  the  carrier  to  limit  his  common  law  liability. 
Jones  V.    Vo&rhees,  10  Ohio,  145.    Fish  v.  Boss,  2  Kelly 
{Georgia),  349.    Bennett  v.  Button,  10  N.  Hampshire,  481. 
The  question  seems  never  to  have  caused  any  difficulty,  ex- 
cept as  it  related  to  carriers  by  land.    Carriage  by  water  has 
been  accompanied  by  a  bill  of  lading,  specifying  the  risks 
from  which  the  carrier  chose  to  exempt  himself,  and  this  has 


EIGHT  OF  EESTEICTING  BY   NOTICE.  273 

been  held  to  be  a  special  contract,  and  to  afford  protection. 
Swindler  v.  Millcml,  2  Bich.  {S.  C.)  286. 

§  502.  Tlicre  are,  however,  cases  in  which  the  carrier 
may  limit  his  liability  by  a  general  notice.  Tlie  ordinary 
run  or  character  of  the  goods  he  is  accustomed  to  carry,  is 
generally  known  in  the  community  among  whom  his  business 
is  carried  on,  and  he  may  give  a  general  notice  that  he  will 
not  be  answerable  for  goods  of  a  different  description,  and 
higher  value,  such  as  money  and  jewelry  ;  or  that  if  he 
undertakes  the  carriage  of  them,  he  shall  be  paid  a  higher 
compensation.  Thus  the  courts  say  :  "  that  if  the  carrier 
has  given  general  notice  that  he  will  not  be  liable  over  a 
certain  amount,  unless  the  value  is  made  known  to  him  at 
the  time  of  delivery,  and  a  premium  for  insurance  paid, 
such  notice,  if  brought  home  to  the  knowledge  of  the  owner, 
is  as  effectual  in  qualifying  the  acceptance  of  the  goods,  as 
a  special  agreement,  and  the  owner,  at  his  peril,  must  dis- 
close the  value,  and  pay  the  premium."  Orange  County 
Bank  v.  Brown,  9  Wend.  85-115. 

§  603.  But  while  the  carrier  is  held  to  this  extreme  lia- 
bility, the  owner  of  goods  is  very  properly  placed  by  the 
law  under  obligations  not  to  practice  upon  him  any  misrep- 
resentation, fraud,  or  concealment  of  any  kind.  He  must 
do  or  say  nothing  tending  in  any  way  to  mislead.  The 
adopting  any  disguise  for  his  box,  the  labelling  it  as  contain- 
ing articles  of  a  different  nature  and  inferior  value  from  its 
real  contents,  will  prevent  a  recovery  in  case  of  loss.  A 
traveller's  trunk  is  lost  containing  $11,250  in  money.  It 
was  sought  to  be  recovered  as  haggage.  Held,  that  it  did 
not  fall  within  the  commonly  received  import  of  the  term 
"  haggage,''^  and  that  an  attempt  to  Iiavc  it  carried  free  of 
reward,  imdor  cover  of  "  haggage,^''  was  an  imposition  upon 
the  carrier  ;  that  he  was  thereby  deprived  of  his  just  c^-'* 
pcnsation,  besides  being  subjected  to  unkno-"" 
Orange  County  Banh  v.  Brown,  0  .lU,- and  of  all  disguifio 

§  504.  In  the  absent'" 
IP 


274  IIOAV   FAR   PKOTECTED   BY   NOTICE. 

or  concealment,  the  question  lias  arisen  whether  it  devolvea 
upon  the  owner  to  disclose  the  superior  value  contained  in 
a  trunk  or  box,  or  whether  it  is  the  business  and  duty  of 
the  carrier  to  inquire,  or  to  be  chargeable  for  the  full  value 
if  he  does  not.  The  latter  may  be  regarded  as  the  correct 
doctrine.  Walker  v.  Jackson^  10  Mees.  (&  Welsb.  161.  The 
further  question  has  also  been  presented,  whether  the  giving 
of  notice  has  the  effect  of  preventing  the  necessity  of  making 
inquiries  on  the  part  of  the  carrier,  thus  shifting  the  respon- 
sibility to  the  owner,  and  devolving  upon  him  the  obligation 
to  disclose  in  accordance  with  the  notice  he  has  received,  or 
whether  the  carrier  is  still  bound  to  inquire ;  and  the  rule 
is  settled  in  accordance  with  the  doctrine  first  mentioned. 
Brook  V.  Pickwick^  4  Bing.  218.  Orange  County  Bank  v. 
Broion^  9  Wend.  85-115. 

§  505.  Another  inquiry  here  arising  relates  to  the  lia- 
bility of  the  carrier,  supposing  he  has  protected  himself  by 
notice  brought  home  to  the  owner.  In  other  words,  against 
what  is  the  notice  a  protection  ?  The  answer  is  that  it  pro- 
tects him  only  against  his  extraordinary  liability  as  a  carrier. 
The  owner  of  lost  goods  may  still  aver  and  prove  that  the 
loss  was  caused  by  negligence^  and  that  even  of  the  ordinary 
character ;  and  the  carrier  will  be  liable,  for  proof  of 
negligence  is  held  to  be  an  answer  to  proof  of  notice. 
Neither  will  the  notice  protect  the  carrier  from  a  misfea- 
sance^ as  the  delivery  of  goods  at  a  wi'ong  place,  or  to  a 
wrong  person ;  or  the  sending  of  them  by  a  different  con- 
veyance from  that  stipulated,  by  means  of  which  they  are 
lost.  Neither  will  a  notice  dispense  with  the  performance 
on  the  part  of  the  carrier  of  any  implied  duty,  and  hence  if 
a  loss  were  to  occur  in  consequence  of  the  vessel  not  being 
reasonably  stout,  strong,  and  well  equipped  for  the  voyage, 
the  carrier  will  be  held  liable  notwithstanding  the  notice. 
, ""  ,  P,  these  cases,  however,  the  giving  of  notice  shifts  the 

who  must  then'sfe^  *^^  ^^^'^■i"'  ^^  *^^^  ^^^^  °^  ^^^  ^^°^'' 

-'^n-lio;eiice  or  misfeasance,  or  non- 


DISCHARGE    BY   DELIVEET  TO   CONSIGNEE.  275 

performance  of  duty,  upon  tlio  strength  of  -svliicli  lie  still 
claims  to  recover. 

§  506.  Ilaving  seen  how  the  common  carrier  of  goods  is 
charged  by  their  delivery  and  acceptance ;  what  are  his 
common  law  liabilities ;  how  he  may  vary,  modify,  or  re- 
strict them ;  and  what  residuum  of  lialnlity  still  remains, 
notwithstanding  such  modification  or  restriction  ;  it  will  be 
next  in  order  to  inquire  how  he  can  entirely  discharge  him- 
self from  all  liability.  This  is  accomplished  by  the  delivery 
of  the  goods  to  the  consignee.  This  raises  the  mquuy,  what 
is  necessary  to  constitute  a  complete  delivery,  such  as  will 
detennine  tho  transit  ?  And  first  in  regard  to  time.  The 
rule  is  that  when  no  time  is  fixed  upon  for  the  transit,  a 
reasonable  time  is  implied,  and  that  the  carrier  is  bound  to 
make  a  proper  delivery  with  reasonahle  expedition.  "What 
that  is,  must  be  governed  by  the  circumstances  of  each  par- 
ticular case.  Another  question  relates  to  the  damages  to 
which  the  carrier  is  liable  if  he  fail  to  deliver  within  a 
reasonable  time.  An  account  good  when  delivered  to  the 
earner  is  barred  by  the  statute  of  limitations  when  delivered 
to  the  consignee.  Held,  the  carrier  was  liable.  Tavor  v. 
Philhrick,  1  iV.  Hamp.  326.  The  omission  to  deliver  within 
a  reasonable  time  does  not  render  the  carrier  liable  for  the 
value  of  the  article.  He  is  only  liable  for  damages  caused 
by  such  omission  Scovill  v.  Griffith,^  2  Kern.  509.  Where 
there  is  no  express  agreement  in  relation  to  time  of  trans- 
portation, the  carrier  is  not  responsible  for  delays  occurring 
without  his  default.  Wibert  v.  The  New  York  cC*  EHe 
Eailroad  Co.,  2  Kern.  245.  The  consignee  is  under  no 
obligation  to  receive  goods  tendered  late  in  the  day,  and  after 
he  has  dismissed  his  hands  ;  and  if  a  subsequent  loss  occm's, 
the  canier  will  be  responsible.  Eacjle  v.  White^  6  Wliart. 
{Penn.)  505. 

§  507.  The  earner's  contract  to  deliver  may  be  suspended 
by  some  temporary  unavoidable  obstacle,  and  yet,  if  he  has 
used  a  reasonable  degree  of  exertion  and  diligence  in  the 


276  MANNER  OF  DELIVERT  TO  CONSIGNEE. 

transportation,  lie  will  bo  excused.  A  carrier  on  the  canal 
is  prevented  by  reason  of  ice,  from  accomplishing,  without 
serious  detention,  the  whole  voyage.  He  is  only  bound  to 
deliver  at  the  place  appointed,  upon  the  canal  again  becom- 
ing naviga])le.  Parsons  v.  Ilardy,  14  Wend.  215.  So, 
also,  the  delay  occasioned  by  the  disordered  condition  of  a 
lock,  would  have  the  same  effect.  But  where  there  is  an 
express  contract  to  deliver  within  a  certain  prescribed  time, 
no  temporary  obstruction  will  be  any  defence,  but  he  is  held 
strictly  to  the  performance  of  his  contract.  The  occurrence 
of  inevitable  necessity  in  such  case  will  constitute  no  excuse. 
§  508.  As  to  person  and  place  of  delivery,  when  the 
carriage  is  by  land,  in  the  absence  of  any  special  contract 
or  established  usage  to  the  contrary,  the  goods  must  be 
carried  to  the  residence  of  the  consignee.  To  serve  as  a 
perffect  protection  to  the  carrier,  the  tender  of  delivery  should 
be  to  the  individual  consignee  at  his  residence  or  place  of 
business,  and  hence  where  the  goods  were  delivered  to  a 
porter  at  the  inn,  it  was  held  insufficient.  Hyde  v.  Trent 
i&  Mersey  Navigation  Company,  5  Term.  Bep.  389.  The 
delivery  of  the  goods  according  to  the  label  upon  them  will 
always  discharge  the  carrier.  The  consignee  may  take  pos- 
session before  they  arrive  at  their  place  of  destination,  and 
that  will  discharge  the  carrier.  But  although  the  delivery 
should  be  to  the  consignee  at  his  residence  or  place  of  busi- 
ness, yet  the  carrier  may,  in  exoneration,  prove  that  his 
uniform  usage  and  course  of  business  is  to  leave  goods  at 
his  usual  stopping  places  in  the  towns  to  which  the  goods 
are  directed,  without  notice  to  the  consignees,  provided  such 
usage  be  shown  of  so  long  continuance,  uniformity,  and 
notoriety,  as  to  justify  a  jury  in  finding  it  was  known  to  the 
owner.  Gibson  v.  Culver,  17  Wend.  305.  The  delivery  of 
money  at  the  banking  office  to  a  person  usually  employed 
as  a  porter  at  the  bank  is  insufficient  unless  authorized  by 
the  bank,  and  such  authority  may  be  either  express  or  im- 
plied.   Sweet  V.  Barney,  24:  Barl.  533. 


WHAT  WILL  EXCUSE   NON-DELIYEKT.  277 

§  509.  The  question  of  sufficiency  of  delivery  has  come 
up,  perhaps,  the  most  frequently  in  cases  of  carriage  by 
water.  Here,  although  usage  may  be  urged  in  defence  of 
it,  a  delivery  by  placing  goods  on  the  wharf,  without  any 
notice  to  the  consignee,  is  held  insufficient.  To  render  the 
delivery  complete,  notice  should  be  given  to  the  consignee, 
and  after  that,  the  carrier  still  continues  liable  until  the 
consignee  has  had  a  reasonable  time  to  remove  the  goods. 
Moses  V.  B.  &  M.  R.  R.  Co.,  32  iV".  Ramx?.  523. 

§  510.  The  question  arises  what  becomes  the  duty  of  the 
carrier,  in  case  the  consignee  is  dead,  or  absent,  or  refuses 
to  receive  the  goods.  He  is  still  charged  with  them,  and 
will  not  Ke  justified  in  leaving  them  on  the  wharf  unpro- 
tected, or  in  abandoning  them  in  any  other  way.  He  may, 
in  such  case,  relieve  himself  of  them,  by  placing  them  in 
store  with  a  responsible  person  in  the  same  business  as  the 
consignee,  at  the  place  of  their  consignment ;  and  the  person 
so  receiving  them,  becomes  the  agent  or  bailee  of  the  owner 
of  the  property.     Fish  v.  Newton,  1  Denio,  45. 

§  511.  This  branch  of  the  subject  is  very  properly  closed 
by  inquiring  what  will  excuse  a  non-delivery  of  goods  hy  the 
caffi^r.    He  is  excused  where  the  loss  occurs — 

1.  From  an  act  of  God. 

2.  From  that  of  a  public  enemy. 

3.  Where  the  goods  have  been  necessarily  thrown  over- 
board to  preserve  the  lives  of  the  crew  and  passengers. 

4.  "Where  the  loss  has  been  occasioned  by  the  illegal  act 
of  the  shipper. 

5.  Where,  by  agreement,  there  is  a  discharge  from  fur- 
ther responsibility. 

G.  Tlicir  delivery  at  the  place  of  their  original  destina- 
tion is  excused  by  receiving  subsequent  directions  as  to  the 
place  of  delivery.  Or  they  may  be  accepted  short  of  their 
original  place  of  destination. 

7.  AVhere  the  owner  accompanies  them,  having  their 
exclusive  custody. 


278  cakkier's  eight  to  compensation. 

8.  Wlicn  they  arc  stopped  in  transitu  by  the  act  of  tho 
vendor,  or  consignor. 

§  612.  The  carrier's  right  should  be  co-extensiyc  "with 
his  severe  liabilities.  lie  has  a  special  property  in  the 
goods  he  transjjorts.  This  enables  him  to  sustain  an  action 
against  any  person  disturbing  his  possession.  This  is 
grounded  upon  two  reasons  :  One  the  interest  he  has  in  the 
transportation,  the  other  his  responsibility  to  the  owner  for 
their  injury  or  loss.  But  he  enjoys  no  absolute  right  of 
projDerty  in  the  goods,  and  hence  is  unable  to  give  any  title 
in  them  to  another  either  by  way  of  sale,  pledge,  or  mort- 
gage. A  carrier  having  jrarchased  a  boat,  deposited,  as 
security  for  its  price,  a  part  of  his  load  of  salt  with  the 
vendor.  Held,  the  latter  acquired  no  right  against  the 
owner  of  the  salt.  Kitchell  v.  Yanador,  1  Black.  356.  The 
right  of  giving  bottomry  and  respondentia  bonds,  grows,  as 
we  have  seen,  out  of  necessity,  and  the  peculiar  circum- 
stances of  the  case. 

§  513.  The  carrier's  right  is  to  his  compensation,  and  to 
resort  to  all  the  legal  means  by  which  he  may  become  pos- 
sessed of  it.  These  means  are  two-fold — the  one  by  enforc- 
ing his  lien  upon  the  goods,  the  other  by  proceeding  per- 
sonally against  the  owner.  The  first  will  be  considered  in 
the  next  book.  The  last  is  an  action  brought  in  a  court  of 
law  to  recover  his  freight,  or  price  of  hu'e,  of  the  owner  or 
employer.  This  only  becomes  necessary  when  he  has  volun- 
tarily relinquished  the  possession  of  the  goods,  for  until 
then,  his  right  of  lien  gives  him  a  perfect  remedy.  The  car- 
rier may,  if  he  chooses,  demand  the  payment  of  his  freight 
in  advance.  But  if  he  waives  that  right,  he  must  fully  earn 
it  before  he  can  resort  to  other  means  to  possess  himself  of 
it.  The  contract  which  gives  him  the  right  to  claim  it  is 
an  entire  one  and  indivisible,  and  must,  therefore,  be  wholly 
performed,  before  any  thing  can  be  recovered.  It  is  the 
price  of  carriage^  and  not  simply  of  receiving  goods  to  he 
carried.    Even  the  arrival  of  the  goods  at  their  place  of 


caeeier's  eight  to  freight.  279 

destination  did  not  entitle  the  carrier  to  Ms  freight.  They 
must,  in  addition,  be  delivered,  or  be  in  a  condition  to  be. 
But  if  the  delivery  is  prevented  by  the  act  of  the  owner,  or 
even  by  the  act  of  the  government,  the  freight  will  be  con- 
sidered as  earned.  The  carrier  loses  his  freight  by  the  cap- 
ture of  his  vessel,  but  in  case  of  re-capture,  performance  of 
the  voyage  and  delivery,  or  offer  to  do  so,  his  right  becomes 
perfect.  This  is  upon  the  principle  that  he  ought  not  to  lose 
his  freight  in  consequence  of  an  interruption  of  the  voyage 
without  any  fault  of  his ;  and  so  if  the  goods  be  thrown 
overboard  for  the  ship's  preservation,  the  owner  of  the  goods 
must  pay  freight,  and  seek  his  repayment  by  a  general  aver- 
age. 

§  614.  As  to  the  person  to  whom  the  carrier  looks  for 
his  freight  where  he  is  obliged  to  recover  it  by  action,  it  is 
ordinarily  the  party  with  whom  he  made  the  contract  to 
carry  the  goods.  When,  however,  the  goods  are  to  be  de- 
livered to  the  consignee  on  payment  of  freight ;  or,  if  by 
the  bill  of  lading,  the  goods  are  to  be  delivered  to  A,  or  his 
assigns,  he  or  they  paying  freight,  and  the  goods  are  received 
under  it,  that  constitutes  an  implied  undertaking,  and  the 
carrier  can  look  to  him  or  them  for  the  freight.  But  if, 
upon  the  face  of  the  bill,  it  is  apparent  that  the  consignee 
is  a  mere  agent,  his  receipt  of  them  will  subject  him  to  no 
personal  liability.  And  if  there  is  a  mere  receipt  of  goods 
mider  a  bill  of  lading,  the  law,  it  seems,  will  not  inij^ly  a 
promise  from  an  indorser  to  pay  the  freight,  although  a  jury 
are  at  liberty  from  such  fact  to  find  such  a  promise  ;  unless 
the  charter-party  contains  an  express  conti'act  by  the  char- 
terer to  pay  freight,  which  is  referred  to  in  the  bill  of  lading. 
It  is  held  requisite  that  the  ship  break  ground,  to  give  in- 
ception to  fruiglit ;  and  hence,  if  the  ship  be  laden  and  cap- 
tured before  breaking"  ground,  and  afterwards  re-captured, 
but  the  voyage  broken  up,  no  freight  is  earned.  But  after 
breaking  ground,  a  temporary  restraint,  such  as  an  embargo, 
which  suspends,  for  a  time,  the  performanco  of  the  voyage, 


llSO  I'KtlGIir    lOli   TKANSrOETATION   OF   ANIMALS. 

leaves  the  riglits  of  tlie  parties  unaffected.  The  same  prin- 
ciple applies  to  a  blockade  or  hostile  investment  of  the  port 
of  departure.  Tlie  earner,  in  such  case,  may  wait  until  the 
obstacle  is  removed,  (the  same  as  if  navigation  had  been 
obstructed  by  ice,)  and  then  j^roceed  in  the  prosecution  of 
his  voyage.    Palmer  v.  Lorillard,  IG  Johi.  348. 

§  515.  A  question  has  been  raised,  whether,  in  case  the 
cargo  becomes  greatly  deteriorated  during  the  voyage,  the 
consignee  is  obliged  to  receive  it ;  or  whether  it  may  be 
abandoned  in  discharge  of  the  freight.  The  gi'ound  upon 
which  the  right  thus  to  abandon  is  claimed,  is,  that  the 
cargo  is  the  only  proper  fund  and  pledge  for  the  freight.  It 
is  now,  however,  well  settled,  that  no  such  right  exists ; 
that  when  the  carrier  has  completed  the  carriage  of  his 
cargo,  and  is  ready  to  deliver  it,  he  has  performed  all  the  con- 
ditions upon  which  his  right  to  his  freight  depends,  and  that 
upon  no  principle  can  it  be  claimed  that  he  is  an  insurer  of 
the  soundness  of  the  cargo,  as  against  the  perils  of  the  sea, 
or  its  own  inherent  decay.  Griswold  v.  The  New  Yorh 
Insurance  Com/pany,  3  John.  321. 

§  516.  Another  cjuestion  often  presenting  itself,  regards 
the  rights  of  the  carrier  to  recover  freight  for  the  transpor- 
tation of  animals  that  have  died  on  their  passage  without 
his  fault  or  negligence.  Tliis  question  is  settled  by  referring 
to  the  nature  and  terms  of  the  agreement.  If  the  agreement 
be  to  pay  freight  for  the  lading  of  the  animals,  that  is  ac- 
complished by  receiving  them  on  board,  and  their  death  on 
the  passage  cannot  deprive  the  carrier  of  his  freight.  If  it 
be  for  the  transportation  of  them,  that  is  not  performed 
until  their  arrival  at  the  place  of  destination ;  and  if  they 
die  in  transit,  the  freight  is  not  earned.  But  if  neither  of 
these,  or  any  corresponding  terms  are  used,  and  there  is  no 
express  agreement  respecting  the  payment  of  freight,  the 
general  rule  is  that  freight  is  recoverable  whether  they  live 
or  die  during  the  voyage. 

§  517.  Another  question  has  arisen  out  of  the  foreign 


EIGHT  TO  FEEIGHT  PKO  EATA.  281 

marine  law,  wliicli  allows  freight  paid  in  advance  to  be  re- 
covered back,  if  the  goods  are  not  carried,  nor  the  voyage 
performed,  by  reason  of  any  event  not  imj)utable  to  the 
shipper.  This  is  obviously  the  equitable  doctrine,  as  the 
consideration  for  payment,  which  was  the  carriage  of  the 
goods,  has  utterly  failed.  But  the  rule  settled  in  reference 
to  it  in  England  and  in  this  country  is  entirely  ditferent. 
The  English  rule  is  that  if  the  charter-party  is  silent,  the  law 
will  require  a  performance  of  the  voyage  before  the  freight 
becomes  due,  but  that  the  parties  may  stipulate  that  part 
of  the  freight  be  paid  in  anticipation,  and  be  made  free 
from  subsequent  contingency  of  loss,  by  reason  of  abandon- 
ment of  the  subsequent  voyage.  Tliat  to  enable  a  recoveiy 
back  of  any  freight  thus  paid  in  advance,  a  stipulation  to 
tliat  effect  between  the  parties  is  necessary.  De  Silvale  v. 
Kendall^  -i  Maule  &  Selw.  37.  Our  rule  is  directly  the 
reverse  ;  requiring  a  stipulation  that  the  freight  paid  in  ad- 
vance is  not  to  he  returned  if  the  voyage  be  not  performed, 
otherwise  the  shipper  may  recover  it  hack.  Pitman  v. 
Hooper^  3  Sum.  50. 

§  518.  Another  question  relates  to  part-pajTnent,  or  the 
right  to  ratable  freight,  which  may  arise  in  two  cases — one, 
where  the  ship  has  performed  the  whole  voyage,  having 
brought  only  a  part  of  her  cargo  to  the  place  of  destination, 
and  the  other  where  she  has  not  performed  her  whole 
voyage,  the  owner  having  received  his  goods  at  some  port 
short  of  that  of  delivery.  The  first  occurs  in»the  case  of  a 
general  ship,  or  one  chartered  for  freight,  to  be  paid  accord- 
ing to  the  quantity  of  goods.  Freight  is  then  due  only  for 
what  the  ship  delivers.  But  suppose  the  ship  is  chartered 
at  a  specific  sum  for  the  voyage,  and  a  part  of  her  cargo  is 
lost  by  a  peril  of  the  sea,  and  hence  a  part  only  is  delivered, 
can  there,  in  such  case,  be  an  apportionment  of  the  freight? 
The  contract  is  then  regarded  as  entire,  and  the  delivery  of 
the  whole  cargo  a  condition  precedent  to  the  recovery  of 
freight.    It  is  the  whole  or  nothing.    This,  however,  presents 


282  ArrOKTIONMENT  OF  FKEIGHT. 

a  case  of  f^reat  liardshij),  and  if  any  circumstances  were 
apparent,  from  wliicli  a  new  contract  to  pay  freight  ^ro  rata 
might  be  inferred,  such,  for  instance,  as  an  acceptance  by 
the  freighter  of  the  remaining  portion  of  the  cargo,  relief 
would  proljably  be  afforded. 

§  619.  An  interesting  case  presents  itself  where  the  car- 
rier vessel  is  forced  into  a  port  short  of  its  destination,  and 
is  unable  to  finish  the  voyage.  Then,  if  reasonable  time  is 
allowed  to  repair,  or  for  the  carrier  to  proceed  in  another 
ship,  he  will  be  entitled  to  the  whole  freight.  But  if  the 
owner  of  the  cargo  consents,  and  the  carrier  refuses  to  go 
on,  he  is  not  entitled  to  freight,  because  he  refuses  to  earn 
it.  But  the  carrier,  in  order  to  entitle  himself  to  freight, 
ought  to  repair  his  vessel,  or  obtain  another  one  and  proceed, 
or  offer  to  do  so,  and  if  so  he  proceeds  through  the  remainder 
of  the  voyage  the  samO  as  if  no  suspension  of  it  had  oc- 
cui-red.  But  the  merchant  or  owner  may,  if  he  choose,  re- 
ceive the  cargo  at  the  port  of  necessity,  and  in  that  case 
there  occurs  what  is  termed  on  apportionment  of  freight^ 
that  is,  freight  ascertained  from  a  calculation  of  the  propor- 
tion of  the  voyage  performed.  The  conditions  of  this  ap- 
j)ortionment  are  :  1st,  that  the  ship  and  cargo  be  forced  into 
a  port  short  of  its  ultimate  destination  by  necessity,  and  be 
unable  to  prosecute  the  voyage,  and  2d,  that  the  cargo  be 
there  voluntarily  accepted  by  the  owner.  Luk^^  v.  Lyde,  2 
Burr.  882. 

§  520.  Tlie  common  earner  is  not  held  to  the  same  severe 
liability  for  injuiies  that  occm'  to  passengers,  as  for  damage 
and  loss  to  property,  as  he  cannot  exercise  the  same  con- 
trol over  persons  as  he  can  over  inanimate  objects.  He  is 
under  legal  obligations  to  receive  all  persons  applying  for  a 
passage,  provided  he  have  sufficient  room,  and  the  passenger 
pay  or  tender  the  fare.  The  passenger  carrier  is  also  bound 
to  provide  means  and  vehicles  of  carriage  reasonably  strong, 
and  entirely  adequate  for  the  jDurpose  intended.  If  there  is 
any  defect  in  the  original  construction  of  a  stage-coach  or 


LIABILITY  FOE  CAEEIAGE  OF  PASSENGEE3.  283 

railroad  car,  although  out  of  sight,  yet  if  it  be  discoverable 
on  the  most  minute  examination,  and  any  damage  is  thereby 
occasioned  to  the  passenger,  the  carrier  will  be  answerable. 
He  is  bound  to  adopt  all  practicable  improvements  tending 
to  insure  the  safety  of  passengers,  and,  if  he  fail  to  do  so, 
he  is  Hable.  And  hence,  where  a  passenger  in  a  railroad 
car  was  injured  by  the  breaking  of  one  of  the  axles  in  con- 
sequence of  a  latent  defect  which  could  not  be  discovered 
by  the  most  vigilant  external  examination,  and  yet  the 
manufacturer  by  resorting  to  the  test  of  bending  the  iron 
after  the  axle  was  formed,  and  before  its  connection  with  the 
wheel,  might  have  discovered  the  defect,  tlie  company  were 
held  liable  ;  the  doctrme  established  being,  that  the  passen- 
ger carrier  is  liable,  although  the  defect  be  latent  and  not 
discoverable  by  the  most  vigilant  external  examination, 
pi'ovided  it  le  ascertainable  hy  any  known  test  whether  it  he 
such  as  is  applied  hy  the  manufacturer  or  the  carrier.  Hege- 
man  v.  The  Western  Railroad  Corporation,  3  Kern.  9. 

§  521.  The  passenger  carrier  is  bound  to  carry  his  pas- 
sengers safely  owdijyToperly,  and  is  liable  for  all  consequences 
resulting  from  the  want  of  such  care  as  the  person,  under 
the  cu'cumstances  of  the  case,  may  require.  Ilis  liability 
is  much  the  same  as  that  of  a  special  carrier  of  goods  for 
hire.  He  is  answerable  for  the  want  of  due  care,  diligence, 
and  skill ;  and  hence  where  an  injury  occurs  to  the  person 
of  a  passenger  l)y  mere  accident,  without  any  fault  on  his 
part,  he  is  not  responsible.  Bennett  v.  Dutton,  10  iV. 
Uamp.  481. 

§  522.  It  is  the  right  of  the  passenger  carrier  to  prescribe 
all  reasonable  rules  and  regulations  which  are  proper,  and 
which  are  essential  to  aid  him  in  the  performance  of  his 
undertaking  ;  and  hence  wlicre  a  railroad  company  made  a 
regulation  requiring  the  passengers,  soon  after  entering  the 
cars,  to  give  up  their  tickets,  receiving  checks  in  exchange, 
and  a  passenger,  on  demand,  refuses  to  deliver  up  liis  ticket, 
it  was  held  that  the  conductor  might  demand  the  i)aymcnt  of 


284  LIMITATION  OF  LIABILITY  FOE  PASSENGEE8. 

liis  fare,  and  on  refusal,  eject  liim  from  the  cars.  Northern 
Railroad  Co.  v.  Page^  22  Barb.  130.  And  so,  also,  a  regu- 
lation requiring  passengers  to  exhibit  their  tickets  whenever 
required  by  the  conductor,  and  directing  the  ejection  from 
their  cars  of  those  who  should  refuse  to  do  so,  has  been  held 
a  reasonable  and  proper  regulation,  and  one  that  the  pas- 
sengers must  obey,  or  forfeit  the  right  to  their  further  car- 
riage. Hibhard  v.  The  New  Yorh  i&  Erie  Railroad  Co.^  15 
New  YorTc  Rep.  455. 

§  523.  The  question  has  arisen  how  far  it  was  competent 
for  the  passenger  carrier  to  limit  his  liability  for  injuries  to 
the  person,  and  it  has  been  held  that  he  may,  by  positive 
stipulation,  relieve  himself  to  a  limited  extent,  from  the  con- 
sequences of  his  own  negligence  or  of  that  of  Jiis  servants. 
But  that,  in  order  to  accomplish  this  object,  the  contract 
must  be  clear  and  explicit  in  its  terms,  and  plainly  covering 
such  a  case.  Hence  a  drover's  pass  containing  a  provision 
that  "  the  persons  riding  free,  to  take  charge  of  the  stock, 
do  so  at  their  own  risk  of  personal  injury,  from  whatever 
cause,"  does  not  exempt  the  earner  from  liability  for  gross 
negligence,  or  for  the  want  of  ordinary  care.  That  he  is  still 
liable  for  what  would  be  regarded  as  a  fault  or  misconduct 
on  his  part,  independent  of  any  peculiar  responsibility  at- 
tached to  his  calling  or  employment ;  and  that  he  is  bound 
to  observe  reasonable  care  and  precaution,  employ  persons 
of  requisite  skill,  and  possess  vehicles  fit  for  use,  and  adapted 
to  the  nature  of  the  service  requii*ed.  Smith  v.  The  New 
YorTc  Central  Railroad  Co.,  29  Barh.  132. 

§  524.  The  passenger  carrier,  if  a  stage-coach  proprietor, 
will  be  liable  for  any  injury  occasioned  by  the  racmg  of  the 
driver  against  other  coaches,  and  the  upsetting  of  the  coach 
is  taken  to  be  sufficient  irrima  facie  evidence  of  negligence 
to  shift  upon  the  carrier  the  bm*den  of  proof  to  show  cir- 
cumstances such  as  negative  all  negligence  on  his  part. 
Peck  and  wife  v.  Niel,  3  McLean,  22.  And  his  liability 
will  be  the  same  although  the  injmy  result  from  the  passen- 


WHEN  NEGLIGENCE  WILL  PBEVENT  EECOVEET.  285 

ger's  own  act,  as  by  leaping  from  the  vehicle,  provided  the 
state  of  peril  will  justify  it.  StoTces  v.  Saltenstall,  13  Peters^ 
181.  In  the  case  of  collision  between  two  carriages,  the 
employer  of  the  driver,  by  whose  negligence  or  misconduct 
it  occurred,  must  be  responsible  for  the  consequences.  But 
the  rule  is  that  if  the  plaintiflf's  negligence  in  any  wmj  con- 
curred in  causing  the  damage,  he  is  not  entitled  to  recover. 
He  must  not  appeal  to  the  law  for  redress  when  he  is  him- 
self at  fault;  and  hence  where  one  was  injured  by  an  ob- 
struction in  a  highway  against  which  he  fell,  it  was  held 
that  he  could  not  maintain  an  action  if  it  appeared  that  he 
was  riding  with  great  violence  and  want  of  ordinary  care, 
without  which  he  might  have  seen  and  avoided  it.  Butter- 
field  V.  Forester^  11  East.  60. 

But  although  there  may  have  been  negligence  on  the 
part  of  tlie  plaintiff,  yet  the  rule  is  understood  to  be,  that  he 
is  entitled  to  recover  unless  he  might,  by  the  exercise  of 
ordinary  care,  have  avoided  the  consequences  of  the  defend- 
ant's negligence.  The  burden  of  proof  is  here  devolved 
upon  the  carrier,  and  he  is  bound  to  show  that  there  has 
been  no  disregard  of  his  duties,  and  that  the  damage  has 
resulted  from  a  cause  which  human  care  and  foresight  could 
not  prevent. 

QUESTIONS. 

Who  is  a  common  carrier  ?  What  two  elefnents  enter  into  his  com- 
position ?  What  serves  to  define  the  different  kinds  of  carriers  ?  Enu- 
merate them.  Where  there  are  successive  companies  over  a  continuous 
line  of  travel  and  no  partnership,  what  is  the  liability  and  duty  of  tho 
receiving  carrier?  What  illustration?  What  the  statutory  provision? 
What  can  be  made  matter  of  agreement  as  to  carrying  through  the  entira 
route  ?  When  is  a  carrier  liable  for  loss  of  money  ?  What  is  a  carrier's 
liability  for  baggage  ?  On  what  principle  is  he  liable  ?  Wliat  is  the 
limitation  ?  Under  whose  charge  must  the  baggage  be  ?  What  is  tho 
carrier's  duty  as  to  receiving  goods?  When  can  he  decline?  What 
must  the  owner  do,  when  offering  them  for  carriage  ?  Wliat  the  carrier's 
liability  if  he  declines  receiving  them  ?  When  docs  tlie  carrier's  liability 
commence  ?    By  what  is  it  fixed  ?    What  is  indispensable  to  render  him 


280  '       QUESTIONS. 

liable?  What  is  a  sufficient  delivery  to  a  canal-boat  carrier?  What 
instance  of  usage  as  to  jilace  ?  What  is  the  carrier's  liability  ?  IIow 
does  the  law  regard  hira  ?  For  what  reason  ?  What  is  an  act  of  God  ? 
IIow  as  to  its  equivalency  with  "  inevitable  accident  ? "  '  How  with 
"  natural  necessity  ?  "  When  is  it  clearly  an  act  of  God,  and  to  what  is 
it  in  opposition  ?  What  illustration  ?  IIow  is  the  phrase  "  perils  of  tho 
seas,"  used?  What  does  it  include?  IIow  is  "  dangers  of  the  river" 
considered  ?  Can  a  common  carrier  become  liable  for  an  injury  caused 
by  an  act  of  God  ?  In  what  manner  ?  What  other  instance  ?  What 
case  of  liability  from  delay  ?  What  from  failure  to  transport  passenger, 
arising  from  wilful  act  of  conductor  ?  How  is  a  public  enemy  defined  ? 
What  does  it  include  ?  What  does  it  exclude  ?  Where  is  the  burden  of 
proof?  What  does  the  owner  show  to  make  out  his  case  ?  What  then 
devolves  upon  the  carrier  ?  What  if  the  loss  must  have  happened  with- 
out the  misconduct  which'  occasioned  it  ?  What  illustf  ation  ?  What  is 
the  limitation  to  the  carrier's  responsibility  in  the  transportation  of  ani- 
mals ?  Can  a  common  carrier  restrict  his  common  law  liability  ?  How  ? 
Can  restriction  be  accomplished  by  notice?  Are  there  any  cases  in 
which  a  common  carrier  can  limit  his  liability  by  a  general  notice? 
Under  what  circumstances?  Under  what  obligation  is  the  owner  of 
the  goods  ?  What  will  prevent  a  recovery  in  case  of  loss  ?  What  illus- 
tration ?  Where  there  is  no  notice  and  no  concealment,  on  whom  does 
it  devolve  to  inquire  ?  What  effect  does  the  giving  of  notice  have  on 
the  carrier  as  to  his  duty  of  inquiring  ?  Against  what  is  the  notice  a 
protection  ?  May  the  owner  of  lost  goods  stQl  recover,  and  in  what 
cases  ?  Does  a  notice  dispense  with  any  implied  duty  ?  What  effect  has 
the  giving  of  notice  in  shifting  the  burden  of  proof?  How  does  the 
carrier  discharge  himself  from  aU  liability  ?  When  no  time  is  fixed  for 
the  transit,  what  time  is  implied  ?  When  must  the  carrier  make  deliv- 
ery ?  What  does  the  omission  of  the  carrier  to  deliver  within  a  rea- 
sonable time,  subject  him  to  ?  When  not  responsible  for  delays  occur- 
ring without  his  default  ?  When  is  consignee  under  no  obligation  to 
receive  goods  ?  How  may  carrier's  contract  to  deliver  be  suspended  ? 
And  when  may  he  be  excused  ?  What  illustration  in  case  of  carrier  on 
the  canal  ?  What  bound  to  do  ?  What  delay  otherwise,  and  how  occa- 
sioned will  have  same  effect  ?  How  is  it,  where  there  is  an  express 
contract  to  deliver  ?  To  whom  must  the  delivery  be  made  ?  And  at 
what  place?  In  what  manner  delivered  when  labelled?  When  may 
consignee  take  possession  ?  How  may  the  usage  and  course  of  business 
of  the  carrier  justify  a  delivery  ?  And  what  kind  of  usage  ?  What  illus- 
tration as  to  delivery  of  money  ?  How  are  goods  carried  by  water  dehv- 
ered  ?   What  is  the  carrier  to  do,  when  he  finds  the  consignee  dead,  absent, 


QUESTIONS.  287 

or  refusing  to  receive  ?  THien  is  the  carrier  excused  for  not  deliver- 
ing ?  Uus  the  carrier  any  property,  and  what,  in  tho  goods  he  trans- 
ports ?  "What  does  this  enable  him  to  do  ?  What  grounded  upon  ?  Can 
he  give  any  title  to  the  goods  he  carries  to  another  ?  "What  illustration  ? 
"What  is  the  carrier's  right  ?  "What  moans  has  he  of  enforcing  it  ?  "When 
only  does  an  action  become  necessary  to  recover  his  freight  ?  "What 
may  the  carrier  do  ?  "What,  supposing  ho  waives  that  right  ?  "What  is 
tho  character  of  his  contract  ?  "What  necessary  as  to  performance  ? 
"What  is  freight  the  price  of?  "What  is  necessary  beyond  carriage  of 
goods  ?  "Wliat  if  delivery  bo  prevented  by  act  of  the  owner  or  of  the 
Government  ?  "What  the  rule  in  case  of  capture  ?  "What  of  recapture, 
performance,  and  delivery  ?  How  if  goods  be  thrown  overboard  ?  To 
whom  does  the  carrier  look  for  his  freight  ?  How  when  goods  are  deliv- 
ered to  consignee  on  payment  of  freight  ?  How  where  to  bo  delivered 
to  A  or  assigns,  paying  freight  ?  How  where  it  is  apparent  that  con- 
signee is  a  mere  agent?  How  where  there  is  mere  receipt  of  goods 
under  bill  of  lading  ?  "What  is  necessary  to  give  inception  to  freight  ? 
"What  result  of  this  ?  After  breaking  ground,  what  the  effect  of  re- 
straint, such  as  embargo  or  blockade  ?  Can  tho  cargo  be  abandoned  in 
payment  of  freight  ?  How  is  it  with  claim  for  freight  of  animals  that 
have  died  on  their  passage  ?  "What  the  different  rules  on  this  subject  ? 
Under  what  circumstances  can  freight  paid  in  advance,  be  recovered 
back ?  "Wliat  is  tho  English  rule  on  this  subject  ?  "What  the  American? 
"Wliat  is  tlie  first  instance  mentioned  in  which  freight  pro  rata  can  bo 
paid  ?  "What  the  second  ?  In  what  case  does  the  first  occur  ?  "What 
the  rule  where  ship  is  chartered  at  a  specific  sum  for  the  voyage,  and  a 
part  of  her  cargo  lost  by  a  peril  of  the  sea  ?  "What  circumstance  might 
prevent  this  ?  "What  occurs  where  carrier  vessel  is  forced  into  a  port 
by  necessity  and  is  unable  to  finish  the  voyage  ?  How  may  carrier  tlicn 
lose  his  right  to  freight  ?  "What  must  carrier  then  do,  to  entitle  himself 
to  freight  ?  When,  and  what,  is  apportionment  of  freight  ?  What  aro 
its  conditions?  Is  carrier's  liability  for  injury  to  passengers  tho  same 
as  for  loss  of  property  ?  What  his  obligations  as  to  receiving  passen- 
gers ?  What  is  he  bound  to  provide  ?  What  if  there  be  defect  in  con- 
struction of  stage-coach  or  railroad  car  ?  Wliat  is  lie  bound  to  adopt  as 
to  improvements?  Is  he  ever  answerable  where  defect  is  not  discovera- 
ble ?  When,  and  under  what  circumstances  ?  How  is  passenger  carrier 
bound  to  carry  his  passengers  ?  What  is  he  liable  for  ?  What  docs  his 
liability  resemble  ?  What  answerable  for  ?  "Under  what  circumstances 
not  responsible  ?  What  the  right  of  passenger  carrier  as  to  prescribing 
rules  and  regulations?  What  illustrations?  Can  a  passenger  carrier 
limit  his  liability  for  injuries?    By  what  means?    How  must  contract 


288  MOTIVE  CONDrCTVE  TO  INSUEANCE. 

be  to  have  such  effect  ?  What  ilhistration  ?  What  hmitation  to  his  right 
of  restraint  ?  What  is  ho  still  liable  for,  notwithstanding  the  limita- 
tion ?  What  is  he  bound  to  observe,  whom  to  employ,  and  what  to 
possess  ?  What  act  of  driver  is  stage-coach  proprietor  liable  for  ?  What 
is  upsetting  of  coacli  prima  facie  evidence  of?  AVhere  is  the  burden  of 
proof?  IIow  if  injury  resulted  from  passenger's  own  act  ?  Who  liable 
in  case  of  collision  of  carriages  ?  What  is  the  rule  where  the  plaintiff 
is  guilty  of  negligence  ?  What  illustration  ?  When  is  plaintiff  entitled 
to  recover,  although  negligent  ?    Where  is  the  burden  of  proof? 


CHAPTER  III. 

CONTKACT  OF  INSURANCE  OR  OF  INDEMNITY  FOR   LOSS. 

The  conviction  of  the  safety  of  material  acquisitions 
constitutes  an  element  both  of  enjoyment  to  the  man,  and 
of  credit  to  the  merchant.  As  the  agents  of  destruction  are 
numerous,  complicated,  and  ever  active,  it  can  excite  no 
surprise  that  men  of  prudent,  cautious  habits,  should  seek 
an  indenmity  against  the  losses  they  must  necessarily  occa- 
sion. Tliis  they  have  found  in  contracting  with  the  msurer, 
who,  after  a  wide  survey  of  the  causes  of  damage  and  loss 
as  affecting  both  property  and  life,  has  been  enabled  to  de- 
duce from  what  was  apparently  the  play  of  chance,  a  suffi- 
cient degree  of  certainty ;  and  from  the  laws  of  disorder,  a 
profounder  law  dispensing  order  ;  and  is  therefore  willing, 
for  a  sufficient  consideration,  to  take  upon  himself  aU  the 
risks  to  which  either  property  or  life  may  be  subjected. 
Whether  in  process  of  time  the  knowledge  of  facts,  and  the 
deductions  of  science,  may  not  annihilate  what  now  seems 
to  be  chance,  and  render  so  well  known  to  every  mind  the 
causes  and  occasions  of  loss,  and  the  means  of  avoidance, 
as  to  dispense  entirely  with  this  great  department  of  the 
law,  is  among  the  imsolved  problems  of  the  future.  At 
present,  however,  it  must  be  admitted  that  it  occupies  a 
very  important  position  in  the  body  of  commercial  law. 


CONTRACT  ASTD  PARTIES  TO  MAEDTE  INSUEANCE.        289 

There  are  three  kinds  of  insurance,  ma  Runs,  ftee,  and 
LIFE,  to  eacli  one  of  which  some  consideration  mnst  be  de- 
voted. All  these,  however,  are  gromided  and  bottomed 
upon  the  same  principle,  viz. :  that  of  indemnitt — the  agree- 
ment in  advance  to  make  good  a  possible  loss. 

I.  MARINE    INSURANCE. 
PAKT  I. 

NATUEE  OF  COXTEACT,  AND  PAETIE3. 

§  525.  Marine  Insurance  is  expressed  by  a  contract  in 
which  one  party,  for  a  stipulated  consideration,  agrees  to 
indemnify  the  other  against  certain  perils  to  which  his  ship, 
freight,  cargo,  and  profits,  or  some  of  them,  may  be  exposed, 
during  a  certain  voyage,  or  a  fixed  period  of  time.  In  this, 
as  in  the  other  branches  of  insurance,  the  party  insuring  is 
called  the  insurer,  or  very  commonly  in  marine  insurance, 
the  underioriter.  The  party  indemnified  is  termed  the  in- 
sured or  assured.  The  instrument  embodying  the  contract 
is  termed  the  policy  of  insurance.  Tliis  contract  is  strictly 
one  of  indemnity.  The  insurer  imdertakes,  in  the  event  of 
loss,  to  pay  the  assured  either  such  value  of  the  property 
insured  as  may  be  stipulated  in  the  policy,  or,  if  not  so  stipu- 
lated, such  as  may  be  legally  ascertained.  It  is  entirely 
competent  to  make  an  agreement  for  an  insurance,  to  be 
afterwards  carried  out  by  the  execution  of  a  policy ;  and 
whenever  this  is  done,  a  refusal  to  execute  will  give  a  Court 
of  Equity  jurisdiction  to  decree  specific  performance,  or  even 
a  remedy  at  law  to  recover  in  case  of  loss. 

§  526.  In  regard  to  parties,  the  common  law  rule  is,  that 
individuals,  and  partnerships  or  companies,  may  become  in- 
surers; altliough  practically  the  amount  of  capital  required 
for  that  purpose,  and  some  other  considerations,  has  resulted 
in  rendering  companies  mostly  insurers  in  all  the  risks  taken. 
And  those  companies  are  corporations  either  specially  cre- 
19 


290  BUBJECT-MATTEK  OF  MARINE  INSURANCE. 

ated  by  the  legislature,  or  wlio  have  Lecome  such  under  a 
general  act  passed  for  that  purpose.  In  regard  to  the  party- 
insured,  tlic  question  has  arisen  whether  the  insurance  of  an 
enemy's  property  is  legal,  and,  in  case  of  loss,  enforceable 
at  law.  It  may  now  be  considered  settled  both  in  England 
and  in  this  country,  that  no  such  insurances  can  be  sus- 
tained. Bristow  V.  Towers,  6  Term  Hep.  35.  Grisviold 
V.  Waddington,  16  John.  438.  With  that  exception,  any 
person,  whether  American  or  alien,  may  be  insured.  Prac- 
tically subscriptions  to  policies  are  usually  procured  through 
a  hroher,  to  whom  the  insurer  looks  for  his  premium,  and 
who  occupies  the  position  of  a  middleman  between  the  un- 
derwriter and  the  assured. 

QUESTIONS. 

"What  is  Marine  Insurance  ?  What  the  names  of  the  parties  to  the 
contract  ?  What  the  name  of  the  instrument  ?  What  is  this  contract 
one  of?  What  is  the  effect  of  an  agreement  for  an  insurance  ?  How  is 
such  enforceable  ?  Who  may  be  insurers  ?  Who  are  generally  insurers, 
and  why  ?  Whence  derive  their  existence  and  capacity  ?  Is  insurance 
of  an  enemy's  property  legal  ?  What  other  parties  may  be  insured  ? 
Who,  practically,  is  the  party  through  whom  insurances  are  effected  ? 

PART    II. 

STIBJEOT-MATTER    A]ST)    INSUEABLE   INTEEESTS. 

§  527.  The  subject-matter  insured  must  distinctly  appear 
in  the  policy,  and,  as  a  general  thing,  is  limited  to  what  is 
therein  stated.  If  a  ship  is  specified,  it  becomes  a  part  of 
the  contract,  and  admits  no  substitution  of  anothei*  without 
necessity.  But  a  cargo,  being  of  less  easy  identification, 
may  be  shifted  from  one  ship  to  another,  and  the  insurer, 
if  done  for  a  sufficient  reason,  will  still  be  liable.  Tlie  body 
of  the  ship  being  insured  will  include  all  its  appurtenances. 
It  covers  all  the  legal  interest  in  the  vessel.  A  cargo  may 
be  legally  insured  without  naming  the  ship  ;  as  when  the 
insurance  is  upon  goods  on  board  any  shij)  or  ships.    But 


SUBJECT-MATTER  OF  MAEINE  INSTIRAKCE.  291 

this  is  a  loose  mode  of  insuring,  and  in  case  of  loss,  some- 
times subjects  to  great  inconvenience  in  discriminating  be- 
tween goods  covered  by  different  policies. 

§  528.  The  words  lost  or  not  lost,  as  applied  to  the  snb- 
ject-mattet"  insured,  are  generally  contained  in  a  policy.  Tliis 
phrase  is  inserted  to  cover  any  loss  of  the  property  insured 
which  may  have  happened  at  or  before  the  time  of  entering 
into  the  contract,  and  of  which  the  parties  were  at  the  time 
ignorant.  The  phrase,  however,  is  not  deemed  necessary  for 
that  purpose,  as  without  it  all  losses  then  existing,  of  which 
the  parties  were  ignorant,  would  be  covered  by  the  in- 
surance. 

§  529.  A  voyage  from  abroad  may  be  insured  with  very 
little  of  the  specific  in  description,  and  yet  be  sufiicient.  Tliis 
often  happens  from  necessity.  The  jmrty  washing  to  insure 
may  be  ignorant  of  the  name  of  the  ship,  or  master,  or  port 
of  discharge,  or  consignee,  or  of  the  nature  or  species  of  the 
cargo,  and  may  not  be  able,  therefore,  to  specify  any  of 
these  ;  and  in  such  case  the  insurance  will  be  good  for  the 
amount,  if  effects  be  laden  in  any  ship,  to  any  port,  and  to 
any  consignee.  But  the  cargo  must  be  of  the  same  form 
and  species  as  that  insured,  as  an  insurance  upon  a  cargo  of 
dry  goods  would  not  cover  a  cargo  of  wheat. 

§  530.  Tlic  subject-matter  insured,  whether  a  voyage  or 
a  cargo,  must  be  legal ;  and  if  there  is  any  illegality  in  the 
commencement  of  a  voyage,  it  will  render  the  whole  illegal ; 
but  if  the  voyage,  as  originally  insured,  be  lawful,  a  subse- 
quent illegality  will  not  affect  it,  provided  the  loss  have  no 
connection  with  it.  A  question  that  has  been  very  exten- 
sively discussed,  and  in  England  remained  for  a  long  time 
undetermined,  relates  to  the  legality  of  making  and  enforc- 
ing, in  one  country,  insurance  upon  a  trade  which  is  illegal 
by  the  laws  of  another.  An  insurance,  for  instance,  is  made 
in  one  country  in  fraud  of  the  revenue  laws  of  another.  A 
loss  occurs.  Is  the  insurance  valid  ?  Tliis  was  so  held  by 
Lord  Mansfield  in  Planche  v.  Fletcher^  1  Doug.  251,  upon 


292  BUBJECT-MATTEE  OF  MAEINE  INSUEANCE. 

the  ground  that  one  nation  docs  not  take  notice  of  the  reve- 
nue laws  of  another.  And  altliough  the  morality  of  the 
principle  has  been  a  good  deal  doubted,  yet  it  may  now  be 
regarded  as  settled  in  the  jurisprudence  of  England  and  this 
country  that  such  insurances  arc  valid  and  enforceable,  pro- 
vided the  insurer  knew,  at  the  time,  the  nature  and  precise 
character  of  the  risks  he  was  taking. 

§  531.  Another  kind  of  merchandise  which  has  presented 
some  questions  of  difficulty  consists  of  contraband  goods. 
These  arc  commodities  particularly  useful  in  war,  such  as 
arms,  ammunition,  horses,  timber  for  ship-building,  naval 
stores,  and  in  some  cases  provisions,  especially  if  in  a  manu- 
factured state.  The  great  question  here  presented  is,  whether 
a  trade  in  goods  contraband  of  war  carried  on  by  a  neutral, 
can  be  deemed  legal,  and  insurances  thereon  enforced  in  the 
courts  of  the  neutral  country.  It  is  admitted  that  sucli 
goods,  by  the  law  of  nations,  are  legally  liable  to  seizure 
and  condemnation  by  the  belligerent  powers.  But.  are  these 
rights  under  this  law,  of  a  character  to  control  the  jurispru- 
dence of  the  neutral  country  ?  This  question  came  up  in 
Massachusetts  in  the  case  of  Richardson  v.  Mairie  Insurance 
Company,  6  Mass.  102,  in  which  the  court  decided  that  in- 
surance on  goods  contraband  of  war  against  capture  and 
condemnation  on  that  account,  if  the  facts  are  known  to  the 
underwriter,  and  the  risks  are  not  excepted  in  the  policy, 
is  good,  and  may  be  enforced  in  case  of  seizure  and  con- 
demnation. Some  early  cases  in  the  State  of  IS^ew  York 
are  to  the  same  effect.  But  as  right  and  duty  are  correla- 
tive terms,  and  the  rights  between  nations  at  peace  never 
conflict,  it  is  difficult  to  understand  why  a  right  given  by 
the  law  of  nations  in  time. of  war,  should  fail  to  be  recog- 
nized among  all  nations  which  are  the  subjects  of  that  law. 
The  point  is  stOl  regarded  as  open  in  England  and  in  this 
country. 

§  532.  The  wages  of  seamen  cannot  be  legally  insured. 
The  maxim  is  that  freight  is  the  mother  of  wages,  and  that 


■WHAT   MAY    CONSTITUTE   INSURABLE  INTEEEST.  293 

public  policy,  will  preclude  every  thing  tending  to  diminish 
the  strength  of  motive  to  earn  freight.  If  the  seaman  could 
insure  the  receipt  of  his  wages  at  all  events,  it  would  weaken 
or  destroy  the  motive  to  earn  them,  and  hence  the  law  pre- 
cludes this  kind  of  insurance. 

§  533.  The  same  principle  that  precludes  seamen's  wages 
from  being  a  subject  of  insurance,  in  some  parts  of  conti- 
nental Europe  operates  the  same  upon  freight  which  is  not 
yet  earned,  and  renders  it  uninsurable.  By  freight  is  here 
meant  the  remuneration  to  be  paid  to  the  shipowner  for 
the  hire  of  his  ship.  In  England  and  in  this  country  a  party 
having  an  interest  in  the  subject-matter  from  which  the 
freight  is  to  arise,  may  insure  the  freight,  provided  the  ship 
has  actually  begun  to  earn  it.  An  inchoate  right  to  it  is  an 
insurable  interest,  and  even  an  agreement  that  advances 
shall  be  paid  by  bills  drawn  by  the  captain  against  freight, 
gives  the  parties  making  such  advances  an  insurable  interest 
in  the  freight.  Wilson  v.  Marim,  3-i  iLng.  L.  c£*  Eq.  \^^i. 
Under  this  term  may  also  be  insured  the  benefit  an  owner 
would  derive  from  carrying  his  own  goods  in  his  own  vessel ; 
but  he  must  show  that,  had  not  the  peril  insured  against  inter- 
vened, some  freight  would  have  been  earned ;  that  cither 
some  goods  were  put  on  board,  or  that  there  was  a  contract 
for  doing  so- 

§  534.  As  i-egards  the  person  insuring,  the  rule  is,  tliat 
any  one  having  an  interest  in  the  subject-matter  of  insur- 
ance, may  get  himself  insured  to  the  extent  of  that  interest ; 
and  further,  that  any  person  may  be  said  to  have  an  interest, 
who  may  be  injured  by  the  risks  to  which  that  subject-mat- 
ter is  exposed.  Such  an  interest  need  not  amount  to  prop- 
eriy  in  the  subject  of  insurance.  One  holding  goods  merely 
as  agent,  may  insure.  Tlie  mortgagor  and  mortgagee  both 
have  an  insurable  interest  in  the  property  mortgaged,  the 
latter,  liowcver,  only  to  tlie  amount  of  liis  claim.  Insurance 
by  the  former  does  not  enure  to  the  benefit  of  the  latter 
except  in  case  of  assignment ;  and  if  assigned  as  collateral 


29^1:  AVUAT   MAY   CONSTITUTE   INSUKABLE   INTEKEST. 

security,  and  upon  tlic  destruction  of  tlic  property  mort- 
gaged the  insurers  puy  the  sum  insured  to  the  mortgagee, 
it  is  to  be  applied  as  so  far  a  satisfaction  of  the  mortgage 
debt.    Jioherts  v.  Trader's  Ins.  Co.,  17  Wend.  631. 

§  535.  An  insurable  interest  is  termed  one  sui  generis, 
and  peculiar  in  its  texture  and  operation.  It  covers  inchoate 
rights,  provided  they  are  founded  on  subsistmg  titles,  imless 
they  are  prohibited  by  the  policy  of  tlie  law.  Thus  there 
exists  the  right  to  insure  expected  or  contingent  profits,  but 
in  such  case  the  insured  must  have  a  real  interest  in  the 
subject-matter  out  of  which  they  are  expected  to  arise.  In 
such  case,  no  recovery  can  be  had  without  showing  that 
some  profit  would  have  been  realized  from  the  adventure  if 
the  loss  had  not  occurred.  So,  also,  in  a  case  quite  analo- 
gous, commissions  which  are  expected  to  arise  from  the  sale 
of  consigned  property  constitute  an  insurable  interest  in  the 
property  by  the  consignee. 

§  536.  The  interest  which  is  acquired  by  the  insurer  in 
the  safety  of  what  he  insures,  constitutes  of  itself  an  insur- 
able interest  in  certain  cases.  This  is  termed  re-assurance^ 
and  the  contract  in  which  it  is  embraced  is  wholly  distinct 
from  that  of  the  original  insurance ;  and  hence  the  re-insured 
is  held  to  j)rove  the  loading  and  value  of  the  goods,  as  also 
the  existence  and  extent  of  the  loss,  as  in  the  case  of  the 
original  insurance.  In  this,  the  insurer  seeks  to  indemnify 
himself  against  the  heavy  amount  of  risk  he  has  undertaken, 
and  his  profit,  if  any,  lies  in  the  smaller  sum  for  which  he 
can  get  the  same  risks  again  insured. 

§  537*  Tlie  insured  has  also  sufficient  interest  in  the  sol- 
vency of  his  insm'er  to  procure  an  insurance  upon  that  from 
a  second  insurer,  but  the  contract  he  enters  into  is  a  new 
contract,  the  new  insurer  not  becoming  strictly  a  surety  for 
the  first  one.  This  is  not  often  done,  as  by  multiplying  the 
charges,  it  lessens  the  profits  of  the  voyage.  So,  also,  the 
insured  may  make  a  double  insurance,  in  which  CAse  there 
are  two  insurances  on  the  same  risk,  and  both  in  virtue  of 


LIABILITY   m   CASE   OF   DOLTJLE   INSURANCE.  295 

tlie  same  interest.  But  in  such  case,  the  law  will  not  per- 
mit the  receipt  of  a  double  satisfaction  in  the  event  of  loss. 
Each  underwriter  is  bound  to  contribute  ratably  his  pro- 
portion of  it.  It  is  the  rate  of  subscription,  and  not  the 
order  of  time,  that  must  govern  ;  and  if  the  insured  pro- 
ceeds, as  he  has  a  right  to  do,  to  collect  the  whole  loss  out 
of  one  of  the  insurers,  the  latter  can  recover  against  the 
others  their  ratable  contribution.  It  is  competent  for  par- 
ties to  introduce  into  their  policy  a  clause  preventing  the 
rule  of  contribution,  and  rendering  the  insurers  liable  ac- 
cording to  the  order  of  dates  of  their  policies  ;  and  what  is 
termed  the  American  clause  to  that  effect,  reads  thus  :  that 
"  in  case  of  any  subsequent  insurance,  the  insurer  shall,  nev- 
ertheless, be  answerable  for  the  full  extent  of  the  sum  sub- 
scribed by  him,  without  right  to  claim  contribution  from 
subsequent  assurers."  It  is  held  that  such  a  clause  bars  all 
claims  for  contribution  from  subsequent  insurers  upon  the 
same  cargo,  although  there  was  aliment  for  all  the  policies 
at  the  time  of  subscription.  The  American  Insurance 
Company  v.  Griswold,  l-i  Wend.  390. 

QUESTIONS. 

Where  must  subject-matter  appear,  and  how  ?  To  what  is  policy  lird- 
ited  ?  How  does  ship  become,  if  specified  ?  "WTiat  in  relation  to  car- 
go ?  What  included  where  body  of  ship  is  insured  ?  What  does  it 
cover  ?  How  may  cargo  be  insured  ?  What  the  inconvenience  attend- 
ing it  ?  What  the  effect  in  a  policy  of  words  lost  or  not  lost  ?  Wliat 
the  necessity  of  their  introduction  ?  Voyage  from  abroad,  how  insured  ? 
Wliy  upon  such  imperfect  description  ?  What  necessary  in  regard  to 
cargo  ?  How  must  subject-matter  be  ?  How  if  illegality  in  commence- 
ment of  voyage  ?  How,  in  case  of  subsequent  illegality  ?  Can  insurance 
be  valid  in  one  country  upon  a  trade  illegal  in  another  ?  Wliat  are  goods 
contraband  of  war  ?  Is  insurance  upon  such  goods  valid  in  a  neutral 
state,  and  under  what  circumstances?  Are  the  wages  of  seamen  insur- 
able ?  For  wliat  reason  ?  Is  freight,  yet  to  bo  earned,  insurable  ? 
What  is  meant  by  freight  ?  Under  what  circumstances  may  freight  be 
insured  ?  How  where  owner  carries  his  own  goods  in  his  own  vessel  ? 
What  must  he  then  show  in  order  to  recover  ?    What  must  person  have 


296  VALIDITY   OF   WAGEK   POLICIES. 

in  subject-matter  to  be  insured?  When  may  person  be  said  to  have  an 
interest  ?  Must  such  interest  amount  to  property  ?  "What  is  right  of 
insurance  of  mortgagor  and  mortgagee  ?  "What  application  when  in- 
surance assigned  to  mortgagee  and  loss  and  jiayment  ?  AVhat  does  insur- 
ablo  interest  cover  ?  Under  what  circumstances  are  expected  or  con- 
tingent profits  insurable  ?  What,  in  such  case,  mnst  be  shown  to 
recover?  By  whom  are  expected  commissions  on  sales  insurable? 
What  is  re-assurance?  What  interest  supports  it?  Between  what 
parties,  what  the  natui'e  of  the  contract  ?  What  is  the  re-assured  held 
to  prove  ?  What  does  the  insurer  here  seek  to  do  ?  Wherein  lies  his 
profit  ?  What  right  does  the  interest  of  the  insured  in  the  solvency  of 
the  insurer  give  ?  What  the  nature  of  the  contract  he  enters  into  ? 
Does  the  new  insurer  become  a  surety  ?  What  is  double  insurance  ? 
Can  there  be,  in  such  case,  in  the  event  of  loss,  a  double  satisfaction  ? 
What,  in  such  case,  is  the  duty  of  each  insurer  ?  Which  governs,  rate 
of  subscription  or  order  of  time  ?  What,  if  insured  collects  the  whole 
out  of  one  of  the  insurers  ?  What  is  it  competent  for  parties  to  intro- 
duce into  their  policy  ?  What  is  the  American  clause  ?  What  the  legal 
effect  of  it  ? 

PART   III. 

THE  POLICY,  liSrcLrDEsra  eepeesextation  axd  waera^ttt. 

§  538.  The  policy  is  designed  to  express  the  contract  en- 
tered into  between  the  insurer  and  the  insured.  According 
to  uniform  usage  and  practice,  it  must  be  in  writing. 
Printed  forms  are  very  generally  used.  These  are  of  early 
origin,  arc  awkward  in  their  expression,  but  from  long 
use  have,  to  a  great  extent,  acquired  a  fixed  meaning  from 
judicial  decisions  and  the  usage  of  trade.  Tlie  first  inquiry 
that  presents  itself,  relates  to  the  eflect  of  mere  wager  policies, 
and  is  embraced  in  the  question :  Is  a  mere  hope  or  expectation, 
without  any  interest  in  the  subject-matter,  sufiicient  to  sustain 
a  contract  of  insurance  ?  In  England  it  is  rendered  void  by 
statute.  In  the  State  of  ISTew  York,  a  mere  wager  policy,  such 
as  that  a  ship,  in  which  neither  have  an  interest,  would 
arrive  safe  at  such  a  day,  has  been  assumed  good  at  common 
law.  Tlie  doctrine  has  this  limitation,  that  the  thing  wa- 
gered or  insm-ed  must  be  perfectly  innocent,  because  if 


OPEN  AND  VALUED  POLICIES.  297 

against  public  policy,  or  contrary  to  public  morals,  or  if  it 
injuriously  affect  the  interests  or  feelings  of  third  persons, 
it  is  void.  But  all  such  are  now  rendered  void  by  statute. 
In  many  other  States,  as  in  Pennsylvania  and  Massachusetts, 
such  policies  are  deemed  void  at  law. 

§  539.  A  distinction  is  to  be  taken  between  policies  that 
are  open  and  those  that  are  valued.  The  first  is  where  the 
value  of  the  thing  insured  is  not  inserted  in  the  policy  ;  the 
second,  where  such  value  is  settled  by  agreement  between 
the  parties,  and  inserted  in  the  policy,  as  :  "  the  said  ship, 
&:c.,  goods  and  merchandise,  &c.,  for  so  much  as  concerns 
the  assured  by  agreement  between  the  assured  and  assurers 

in  this  policy,  are  and  shall  be  valued  at  £ ."     In  all 

cases  of  of>cn  policies,  if  a  loss  happen,  the  value  of  it  is  to 
be  ascertained  at  the  trial.  It  is  often  a  matter  of  very 
great  convenience  to  the  assured,  especially  if  the  subject- 
matter  be  profits,  which  are  extremely  diflicult  of  proof,  to 
have  them  valued  in  the  policy,  and  in  Mumford  v.  JIallctty 
1  John.  Hep.  433,  the  court  assume  that  every  policy  on 
profits  must,  of  necessity,  be  a  valued  one  on  account  of  the 
almost  impossibility  of  making  proof  of  their  value.  Tlie 
value  inserted  in  the  policy  should  be  the  prime  cost  of  the 
goods,  including  incidental  expenses  previous  to  shipment, 
together  with  the  premium  of  insurance.  It  should  cover 
the  whole  amount  of  the  insurable  interest,  and  when  agreed 
upon  and  inserted  in  the  policy,  it  is,  in  the  absence  of  all 
fraud  or  mistake,  conclusive  between  the  parties,  leaving  to 
the  assured  on-ly  to  prove  the  insurance,  the  loss,  and  some 
interest  in  the  property.  This  is  equally  applicable  to  total 
and  partial  losses.  The  fact  of  valuation,  however,  is  to 
be  limited  entirely  to  what  it  proposes  to  be — an  agreement 
as  to  value.  It  leaves  open  the  question  whctlier  all,  or 
what  part  of  the  property  valued,  has  been  at  risk.  Whether 
the  insurance  be  upon  freight  or  cargo,  the  question  what 
was  put  on  board  and  subjected  to  risk,  is  an  open  one. 
And  so,  also,  where  a  cargo  is  composed  of  valued  articles 


298  POLICIES  FOR  WnOM  IT  MAT  CONCEEN. 

some  of  wliich  arc  lost,  and  others  arrive  in  safety,  tlie  claim 
of  the  insured  will  be  reduced  in  the  proportion  to  which 
the  articles  lost  bear  to  the  valuation  of  the  whole  at  the 
time  the  risk  commences. 

§  540.  The  policy  should  contain  the  names  of  the  par- 
ties, both  insurer  and  assured.  So  far  as  regards  the  latter, 
the  insurance  is  often  made,  m  this  species  of  policy,  on  ac- 
count of  A,  or  of  whom  it  may  concern  /  and  an  insurance 
thus  made  by  a  partner,  will  cover  partnership  goods,  al- 
though it  will  not  have  that  effect  if  made  in  the  name  of 
an  individual  partner.  The  person  whose  name  is  inserted, 
or  the  A  above  mentioned,  is  usually  the  person  who  effects 
the  insurance ;  and  who  is  often  an  agent,  and  by  adding 
for  whom  it  may  concern^  he  lays  a  foundation  upon  which 
the  interest  of  the  real  party  may  be  averred  and  shown. 
But  the  meaning  of  the  phrase  is  not  that  it  will  cover  the 
interest  of  anybody  who  may  happen  to  have  an  interest  in 
the  property  insm-ed,  but  only  that  of  the  person  who  was 
in  the  contemplation  of  the  parties  to  the  contract.  It  is 
the  person  ordering  the  policy,  although  he  was  at  the  time 
unknown  to  the  insurer,  and  even  to  the  agent  or  broker 
procurmg  the  policy.  It  will  apply  to  the  person  who  is 
intended  to  be  insured,  even  if  he  gave  no  authority  to  effect 
the  insurance.  It  is  sufficient  if  he  afterwards  adopt  it, 
which  he  may  do  either  previously  or  subsequently  to  the 
occurrence  of  the  loss. 

§  541.  If  [the  insurance  be  on  a  ship,  the  name  of  it 
should  be  correctly  stated  in  the  policy,  as  a  variance  from 
its  right  name  might  discharge  the  insurer.  To  avoid  this, 
it  is  a  usual  practice  to  insert  in  the  policy  "  or  by  whatever 
other  name  or  names  the  ship  may  be  called,"  thiis  laying  a 
foimdation  sufficiently  broad  to  enable  the  owner  to  prove 
the  identity  of  the  ship,  which  wiU  be  all  that  may  be  ne- 
cessary on  this  point  to  hold  the  insurer. 

§  542.  Another  thing,  which  for  the  last  century  it  has 
been  usual  to  insert  in  the  policy,  is  what  is  termed  a  mem- 


EFFECT  OF  MEMOEAIHJIIM.  299 

orandum,  which  is  intended  to  qualify  or  restrict  the  risks. 
Without  this,  the  insurer  would  be  liable  for  every  loss 
coming  within  the  risks  insured  against,  however  trifling  or 
insignificant  it  might  be.  This  was  often  more  trouljlesome 
to  arrive  at  than  to  pay.  The  following  is  the  form  of  the 
memorandum :  "  N.  B. — Com,  fish,  salt,  fruit,  flour,  and 
seed  are  warranted  free  from  average  unless  general,  or  the 
ship  be  stranded.  Sugar,  tobacco,  hemp,  flax,  hides,  and 
skins  arc  M'arranted  free  from  average  under  five  per  cent. ; 
and  all  other  goods,  also  the  ship  and  freight,  are  warranted 
free  from  average  under  thi-ee  per  cent.,  unless  general,  or 
the  shij)  be  stranded."  The  legal  eficct  of  this  is  to  protect 
the  insurer  from  liability  to  small  averages,  that  is,  to  par- 
tial losses  ;  and  in  regard  to  the  class  of  articles  first  above 
specified,  it  protects  him  from  making  good  any  partial  loss 
whatever,  and  under  the  second  class,  any  loss  under  fivQ 
per  cent.,  unless,  in  either  case,  the  loss  happens  in  conse- 
quence of  a  general  average,  or  a  stranding  of  the  ship.  It 
is  unfortunate  that  the  word  average  here  made  use  of,  has 
more  than  ojie  meaning  when  employed  in  reference  to  sea 
losses.  Its  meaning  here  is  "  a  partial  loss  hy  sea  damage.'''' 
"  Free  from  average  unless  general,"  therefore,  as  first  stip- 
ulated, means  that  the  insurer  is  not  to  be  liable  for  any 
loss  which  is  not  a  total  one  on  any  of  the  articles  stipulated ; 
and  the  second  stipulation  exempts  him  from  all  liability  as 
to  articles  there  enumerated  for  any  loss  under  five  per  cent, 
of  their  previous  cost  or  insured  value.  In  both  cases,  if 
there  be  a  total  loss,  the  insurer  pays  the  full  amount. 

§  543.  One  of  the  questions  which  has  arisen  under  the 
memorandum  clause  relates  to  the  kind  of  destruction  which 
will  subject  the  insurer  to  the  payment  for  a  partial  loss  on 
memorandum  articles.  Does  it  require  an  aljsolute  destruc- 
tion of  the  articles,  or  is  it  sufiicient  if  the  articles  still  exist 
in  specie,  their  value  being  destroyed  ?  Tlie  decisions  in 
England  have  been  somewhat  fluctuating,  but  in  this  coun- 
try the  rule  is,  that  to  charge  the  insurer,  the  memorandum 


300  LOSS  ON  MEMOKANDrM  ARTICLES. 

articles  must  be  specially  and  pliysicallj  destroyed,  and 
must  not  exist  in  specie.  3  KctvCs  Coram.  295-G.  So,  also, 
it  has  been  held  that  at  a  port  intermediate  the  destination 
of  the  vessel,  the  loss  is  total  when  the  goods  are  so  much 
damaged  as  to  be  incapable  of  reaching  the  port  of  destina- 
tion, in  specie,  or  if  they  are  in  such  a  state  that  the  health 
of  the  mariners  and  the  safety  of  the  vessel  will  not  admit 
of  their  further  transportation.  Ilugg  v.  Augusta  Ins.  Co. 
1  How.  U.  S.  595.  The  same  point  substantially  came  up 
more  recently  and  with  the  same  result  in  the  State  of  New 
York,  in  De  Peyster  v.  Sun  Mutual  Insurance  Company^  19 
Neu)  York,  272. 

§  54:4:.  Another  question  has  arisen  where  a  part  of  the 
memorandum  articles  have  been  totally  destroyed,  while  the 
residue  have  been  partially  damaged.  Can  a  recovery  be 
had  against  the  insurer  for  the  part  so  totally  lost  ?  This 
question  has  been  decided  both  ways  in  England,  but  in 
this  country  it  is  held  that  the  policy  is  to  be  considered 
upon  so  much  of  the  cargo,  as  an  integral  subject,  and  that 
the  assured  could  not  recover  for  each  article  totally  lost,  as 
there  was  neither  a  general  average,  nor  a  total  destruction 
of  the  subject  insured.  Guerlain  v.  The  Columbian  Insu- 
rance Company,  7  John.  527.  Wadsioorth  v.  Pacific  Ins. 
Co.  4  Wend.  33.  In  regard  to  the  second  provision,  exoner- 
ating the  insurer  from  liability  under  a  certain  per  cent,  of 
'  loss,  as  five  per  cent.,  it  is  held  that  if  the  total  amount  of 
losses  during  the  voyage,  although  they  may  happen  at 
several  different  times,  amount  in  the  agregate  to  five  per 
cent.,  the  insurer  will  be  liable.  Donnell  v.  Col.  Ins.  Co.  3 
Sumn.  366. 

§  545.  It  may  become  important  to  detemime  what,  in 
a  legal  sense,  is  a  stranding  of  a  vessel.  Tlie  rule  laid 
down  by  Lord  Tenterden  in  Wells  v.  Hopwood,  3  Barn.  c& 
Adol.  20,  was,  "  that  where  a  ship  takes  the  groimd  in  the 
ordinary  and  usual  course  of  navigation  and  management, 
in  a  tide  river  or  harbor,  upon  the  ebbing  of  the  tide  or 


WHAT  IS  KEPKESENTATION  ?  301 

from  natural  deficiency  of  -water,  so  that  slie  may  float  again 
upon  tlie  flow  of  the  tide,  or  increase  of  water ;  such  an 
event  is  not  to  be  considered  a  stranding  within  the  sense 
of  the  memorandum.  But  where  the  ground  is  taken  under 
any  extraordinary  circumstances  of  time  or  place,  by  reason 
of  some  unusual  or  accidental  occurrence,  such  an  event 
shall  be  considered  a  stranding  within  the  meaning  of  the 
memorandum." 

§  546.  The  next  inquiry  connected  with  the  policy  relates 
to  EEPKESENTATioN  and  wAEEANTT.  It  is  important  to  un- 
derstand the  nature  and  character  of  each,  and  the  efiect 
each  has  upon  the  rights  of  the  parties.  The  first  does  not 
necessarily  form  a  part  of  the  policy  by  being  inserted  in  it. 
It  is  not  usually  found  in  the  policy.  It  relates  to  facts  ex- 
trinsic to  it,  and  is  defined  to  be  "  a  collateral  statement, 
either  by  writing  not  inserted  in  the  policy,  or  by  parol,  of 
such  facts  or  circumstances  relative  to  the  proposed  ad- 
venture, as  are  necessary  to  be  communicated  to  the  under- 
writers, to  enable  them  to  form  a  just  estimate  of  the  risk.'' 
It  may,  however,  have  insertion  in  the  policy,  and  yet  retain 
the  efiect  of  a  representation.  This  occurs  when  the  state- 
ment is  not  of  facts,  but  siinply  relates  to  information,  ex- 
pectation, or  belief;  or  the  parties  may,  at  the  time,  ex- 
pressly declare  that  the  statement  is  to  be  regarded,  or  to 
have  the  eff'ect  merely  of  a  representation.  A  representa- 
tion wliich  is  positive  in  its  character,  and  on  a  point  that  is 
material,  is  deemed  essentially  a  part  of  the  contract ;  and 
if  it  be  a  misrepresentation,  or  a  concealment  of  a  fact 
material  to  the  risk,  it  will  avoid  tlie  policy.  And  it  will 
have  this  effect  in  the  absence  of  fraudulent  intention,  and 
although  it  occurred  througli  mistake,  neglect,  or  accident. 
Nor  will  the  case  be  varied  though  the  loss  were  to  arise 
from  a  cause  unconnected  with  such  misrepresentation  or 
concealment.  And  a  fraudulent  representation  relating 
to  a  fact  not  material  to  the  risk,  will  avoid  the  policy,  if,  in 
the  insurer's  judgment,  it  bo  material  in  respect  to  his  in- 


302  WHAT   MI8KEPKE6ENTATION   MUST   RELATJO   TO. 

(luccmonts  to  undertake  it.  Vatten  v.  The  J^ational  Fund 
Life  Assurance  Co.,  20  New  York  Jt&p.  32.  Tliere  is  this 
dili*ereiicc  l>ctwcen  fraiidideiit  misrepresentation  and  one 
originating  in  mere  mistake ;  the  one  avoids  the  policy 
witliout  showing  its  materiality.  It  is  enough  if  it  be  in- 
tentionallj  false,  without  being  material.  But  in  the  other 
case,  the  materiality  of  the  misrepresentation  must  be  shown, 
or  it  will  not  affect  the  policy.  And  then  it  affects  it  not 
on  the  ground  of  fraud,  but  because  the  insurer  has  com- 
puted the  risk  upon  circumstances  which  did  not  exist. 

§  547.  Such  misrepresentation,  in  order  to  be  effectual 
in  defeating  an  action  on  the  policy  in  case  of  loss,  must 
have  relation  to  a  fact,  and  not  be  a  mere  statement  of 
opinion,  exjyectation,  or  helief.  Such  a  statement,  if  made 
in  good  faith,  will  not  affect  the  policy.  But  if  made  in 
bad  faith,  and  with  a  fraudulent  intent,  it  will  have  that 
effect.  Tlie  misrepresentation  must  also  relate  to  a  fact  then 
existing  or  not  existing,  and  must  not  be  in  the  nature  of  a 
promise  of  doing  something  in  the  future  ;  and  hence  where 
the  insured,  at  the  time  the  insurance  was  obtained,  made  a 
verbal  promise  to  the  insurers,  that  if  they  accepted  the  risk, 
he  would  discontinue  the  use  of  a  fireplace  in  the  basement, 
and  in  the  place  of  it  use  a  stove ;  but  after  having  ob- 
tained the  policy,  he  neglected  to  perform  that  promise,  in 
consequence  of  which  the  building  was  burned,  it  was  held 
that  the  action  on  the  policy  was  nevertheless  sustainable  ; 
that  such  a  statement,  having  no  relation  to  a  past  or  exist- 
ing fact,  material  to  the  risk,  could  not  be  regarded  as  a 
misrepresentation ;  and  having  reference  to  the  future,  in 
order  to  bind,  it  must  be  inserted  in  the  policy,  and  thus 
become  a  warranty.  Alston  v.  The  Mechanics  Mutual  In- 
suroMce  Compaiiy  in  tJie  City  of  Troy,  4  Hill,  329.  Al- 
though this  principle  may  be  regarded  as  settled  in  the  juris- 
prudence of  New  York,  yet  it  is  not  entirely  acquiesced  in, 
as  Mr.  Duer,  in  his  work  on  Insurance,  insists  that  sucli 


WHAT  IS  MATTER  OF  REPRESENTATION.       303 

promissory  representation,  •when  positive  and  false,  equally 
as  any  other,  will  defeat  a  policy. 

§  548.  A  representation  to  the  first  insurer  is  sufficient, 
and  extends  to  all  the  subsequent  underwTiters  upon  the 
same  policy,  and  affects  them  erpially  as  the  first.  The 
reason  assigned  is,  tliat  all  such  subserpient  underwriters  en- 
tered into  the  insurance  upon  the  strengtli  of  their  confi- 
dence in  the  first  one's  judgment  and  knowledge,  and  are 
hence  entitled  to  avail  themselves  of  all  the  conditions  upon 
which  lie  suhscril)ed.  But  it  does  not  cft'ect  a  subsequent 
underwriter  upon  a  different  policy,  although  upon  the  same 
subject-matter  and  against  the  same  risks.  Elt'mcj  v.  Scott^ 
2  John.  157.  The  materiality  of  the  representation,  as  well 
as  the  necessity  of  its  communication,  is  a  question  of  fact 
for  the  jury. 

§  549.  As  to  what  must  and  what  may  not,  be  matters 
of  representation,  the  governing  principle  that  should  guide 
the  insured,  is,  to  communicate  all  the  knowledge  he  posses- 
ses in  reference  to  the  subject-matter  insured,  and  the  risks 
against  which  it  is  insured,  wliich  may  affect  the  mind  of 
tlic  insurer,  eitlicr  as  to  the  f\tct  of  insuring,  or  as  to  the 
premium  or  price  he  will  charge  for  it.  He  is  not  bound  to 
communicate  matters  of  news  or  general  intelligence  ;  nor 
loose  rumors  which  may  be  afloat ;  but  if  he  has  any  par- 
ticular information  not  generally  known  or  accessible  to  the 
public,  he  must  communicate  it  to  the  insurer.  Tlie  latter 
is  bound  to  know  all  matters  aftecting  the  nature  and  gen- 
eral course  of  trade,  and  every  thing  of  a  general  character 
relating  to  the  voyage.  The  general  rule  is,  that  those  facts 
which  are  material  to  the  risk,  and  which  are  known  t«)  one 
party  and  not  to  the  other,  must  be  communicated  at  the 
time  of  eftccting  the  policy.  Altliough  tlic  assured  is  not 
lield  responsible  for  acquiring  all  the  accessible  information 
material  to  tlic  risk  that  may  l)o  had  down  to  tlie  period  at 
whicli  it  is  taken  ;  yet  if  lie  acquires  knowledge  of  a  mate- 
rial fact,  after- having  given  instructions  for  cftecting  a 


304  WUAT   IS   THE  EFFECT  OF   WjLEEANTY  ? 

policy,  lie  must  cither  communicate  it  to  the  insurer,  or 
withdraw  his  instructions.  If  the  insurance  is  effected  on 
the  ajjplication  of  an  agent,  the  assured  takes  the  responsi- 
bility of  all  the  agent's  communications  at  the  time  of  ob- 
taining it.  So,  also,  if  he  adopts  the  information  given,  and 
thus  makes  it  the  basis  of  his  contract  of  insurance,  he  be- 
comes equally  responsible  for  any  concealment  that  may 
have  been  practised  by  the  agent,  the  same  as  if  it  had  been 
practised  by  himself. 

§  550.  Another  important  matter  to  be  considered  in 
connection  with  the  policy  is  the  subject  of  warranty.  This 
is  either  express  or  implied.  The  former  is  an  express 
stipulation  entered  into  by  the  parties  at  the  time  of  effect- 
ing the  insurance,  which  is  in  writing,  and  on  some  part  of 
the  policy,  either  in  the  body  of  it,  or  on  the  margin,  or  at 
the  bottom,  or  in  some  writing  referred  to  and  thus  made  a 
part  of  it.  Whatever  is  thus  made  a  part  of  a  policy  in  the 
form  of  a  warranty,  is  held  to  dispense  with  all  representa- 
tion in  relation  to  it,  as  in  such  case  it  is  made  expressly  a 
part  of  the  contract  of  insurance  itself.  It  differs  from  a 
representation  in  another  important  respect  besides  being  in 
writing  and  a  part  of  the  contract.  It  is  in  the  nature  of  a 
condition  precedent,  and  requii'es  to  be  performed,  or  there 
is  no  contract.  But  not  only  is  performance  required ;  it 
must  be  a  strictly  literal  one.  And  that,  too,  whether  the 
thing  warranted  be  material  or  not.  And  so,  also,  whether 
the  loss  happened  by  reason  of  a  breach  of  the  warranty,  or 
did  not,  is  immaterial.  A  breach  of  it  is  equivalent  to  an 
announcement  that  there  never  was  a  contract.  All  condi- 
tions precedent  require  strict  performance  in  order  to  give  a 
right  of  action.  But  while  a  warranty  is  bound  down  by 
this  great  strictness  of  construction,  all  that  is  necessary  in 
regard  to  a  representation  is — substantial  compliance.  The 
assured  will,  therefore,  be  cautious  what  he  consents  to  have 
put  into  the  policy  under  the  form  of  a  warranty,  while  the 
insm-er  will  seek  to  introduce  all  that  is  possible  under  that 


WHAT   IS   MATTER   OF   WAEKA^TT  ?  305 

form.  It  is,  of  course,  competent  for  tlie  parties  to  make 
whatever  fact  they  choose  the  su])ject  of  a  warranty.  The 
most  usual  are  the  following.  1.  That  the  ship  shall  sail  on 
a  particular  day,  and  under  such  a  warranty  the  ship  must 
not  only  have  its  cargo  on  board,  but  must  be  completely 
unmoored,  and,  in  good  faith,  set  sail  on  the  voyage.  The 
raising  of  anchor,  getting  under  sail,  and  moving  onwards, 
is  not  sufficient,  unless  it  is  all  done  with  the  view  of  com- 
mencing the  -voyage,  every  thing  being  in  readiness  for  that 
purpose.  2.  To  depart  with  convoy,  for  protection,  if  in 
time  of  war.  3.  That  the  ship  was  safe  on  a  particular  day, 
which  is  sometimes  inserted  to  restrain  the  force  of  the  ex- 
pression "  lost  or  not  lost,''^  and  if  the  ship  be  safe  at  any 
time  during  that  day,  the  warranty  is  complied  with. 
4.  That  the  subject-matter  of  insurance  is  neutral  jyroperty  ', 
that  is,  neutral  at  the  commencement  of  the  risk  ;  that  she 
belongs  to  the  subject  of  a  neutral  State,  and  shall  be  navi- 
gated according  to  the  law  of  nations,  and  in  accordance 
with  treaties  between  the  country  to  which  she  belongs  and 
the  belligerents.  5.  "  That  the  insurers  shall  not  be  liable 
for  any  charge,  damage,  or  loss  which  may  arise  in  conse- 
quence of  seizure  or  detention  for  or  on  account  of  illicit 
trade,  or  trade  in  articles  contraband  of  war." 

§  551.  Of  the  implied  warranties,  one  of  the  most  im- 
portant is  sea-worthiness  of  the  vessel  at  the  time  the  policy 
attaches.  Tliis  extends  beyond  the  mere  competency  of  the 
vessel  to  resist  the  ordinary  attacks  of  wind  and  weather. 
It  embraces  every  essential  element  calculated  to  insure 
safety  to  the  vessel,  such  as  a  master  possessed  of  competent 
skill  and  ability,  a  sufficient  crew,  and  all  the  necessary  and 
proper  equipments  of  sails,  anchors,  &c.  This  being  an 
implied  warranty,  it  follows  that  any  breach  of  the  condition 
of  sea-worthiness  at  the  commencement  of  the  risk,  dis- 
charges the  cntu-e  responsibility  of  the  insurer,  whether  the 
loss  incurred  be  in  any  way  the  consequence  of  such  special 
defect  of  sea- worthiness  or  not.  But  when  the  contract  once 
20 


306  IMPLIED   WARRANTY   OF   SEA- WORTHINESS. 

attaches,  it  lias  no  further  obligation.  Any  defect  of  sea- 
worthincsg  which  may  arise  afterwards  from  bad  faith,  or 
want  of  ordinary  prudence  or  diligence  in  the  owner  or  his 
agents,  discharges  the  underwriter  from  liability  for  any 
loss  occasioned  by,  or  the  consequence  of,  such  want  of 
faith,  prudence,  or  diligence,  but  from  no  others.  It  does 
not  affect  the  contract  as  to  any  other  risk  or  loss  covered 
by  the  insurance,  and  not  caused  or  increased  by  such  par- 
ticular defect.  The  American  Insurance  Company  v.  Og- 
den,  20  Wend.  287. 

§  552.  It  seems  conceded  that  there  may  be  different 
kinds  of  sea- worthiness  ;  that  it  may  be  one  thing  in  a  port 
and  another  for  a  whole  voyage  ;  that  it  is  very  much  the 
creature  of  circumstances,  and  must  be  construed  in  ref- 
erence, and  receive  such  a  construction,  as  the  peculiar  cir- 
cumstances at  the  time  require.  A  rule  admitting  of  no 
exception  is,  that  the  vessel  must  be  seaworthy  at  the  com- 
mencement of  the  risk,  whatever  it  may  be,  in  order  to  make 
the  policy  attach  and  render  it  a  charge  upon  the  insurer. 
A  question  has  occurred  of  this  character :  K  the  ship  be 
unseaworthy  at  the  commencement  of  the  risk,  and  the 
defect  be  cured  before  a  loss,  can  a  subsequent  loss  be  re- 
covered under  the  policy  ?  In  Weir  v.  Aberdeen,  2  Barn, 
db  Aid.  320,  it  was  held  that  it  could.  But  in  this  country, 
much  doubt  has  been  thrown  over  it  by  the  case  of  McLa- 
nahan  v.  The  Universal  Insurance  Company,  1  Peters,  ITO. 

§  553.  There  is  also  an  implied  warranty  that  the  insured 
will  exercise  reasonable  diligence  in  guarding  against  the 
risks  covered  by  the  policy,  so  that  no  loss  shall  happen 
through  his  own  default  and  negligence.  One  of  the  most 
common  applications  of  this  principle  relates  to  the  procur- 
ing sufficient  documents  to  maintain  the  national  character 
of  the  ship.  As  every  ship  asserts  and  maintains  its  na- 
tional character  by  means  of  the  documents  it  possesses,  if 
a  loss  should  happen  through  the  default  of  the  insured  in 
not  providing  himself  with  those  documents  required  by  the 


WAEEANTY   OF  DOCTMENTATION.  307 

t 

law  of  nations,  or  by  particnlar  treaties,  the  insurer  would 
not  be  liable ;  and  hence,  if  a  ship  carry  simulated  papers, 
which  is  contrary  to  the  law  of  nations,  and  be  condemned 
upon  tliat  ground,  the  "  the  icarranty  of  docununtatlan  "  is 
infringed,  and  the  underwriters  are  not  liable.  Oswell  v. 
Vi(jnc,  15  £ast,  70.  But  disobedience  to  the  mere  export 
ordinance  of  a  foreign  State  will  not  vitiate  a  poli(^.  The 
difierence  between  an  express  and  an  implied  warranty  of 
this  kind  is,  that  a  breach  of  the  former  at  the  time  of  sail- 
ing, discharges  the  insurers,  while  a  breach  of  the  latter 
docs  not  have  that  effect  unless  a  loss  occurs  as  a  conse- 
quence of  it. 

QUESTIONS. 

What  does  the  policy  express  ?  What  do  usage  and  practice  require 
in  relation  to  it  ?  What  the  objections  and  advantage  of  printed  forms? 
What  are  wager  pohcies  ?  How  regarded  in  England  ?  How  in  New 
York?  What  limitation  in  New  York?  How  are  they  by  statute? 
How  in  Pennsylvania  and  Massachusetts  at  law  ?  What  is  an  open  pol- 
icy ?  What  a  valued  one  ?  Wlien  is  value  ascertained  in  open  policies? 
What  convenience,  and  to  whom,  in  valued  policies  ?  When  is  it  essen- 
tial that  it  should  be  valued  ?  And  why  ?  What  should  value  inserted 
in  policy  he  ?  What  should  it  cover  ?  What  effect  between  the  parties? 
What  does  it  leave  the  assured  to  prove  ?  What  is  it  equally  applicable 
to  ?  What  does  it  leave  still  as  open  questions  to  be  proven  ?  What 
effect  when  cargo  composed  of  valued  articles,  some  lost  and  others 
safe  ?  What  should  policy  contain  as  to  names  of  parties  ?  How  may 
it  be  general  ?  Who,  in  such  case,  generally  effects  insurance  ?  What 
effect  by  adding,  for  whom  it  may  concern  ?  What  is  the  real  meaning 
of  the  phrase  ?  Who  is  then  the  real  party  ?  What  necessary  as  to 
stating  name  of  ship  ?  What  effect  of  variance  ?  What  the  practice  to 
insert  in  policy  ?  What  the  object  of  it  ?  What  is  the  use  of  the 
memorandum?  What,  without  this,  would  the  insurer  be  liable  for? 
What  is  the  legal  effect  of  the  memortmdum  ?  What  is  the  meaning  of 
average  as  here  made  use  of?  What  does  free  from  average  unless  gene- 
ral, mean  ?  What  kind  of  destruction  will  subject  insurer  to  partial 
loss  on  memorandum  articles?  What  is  required  in  this  country  as  to 
loss?  What  is  the  rule  where  part  of  memorandum  articles  are  totally 
destroyed,  and  residue  partially  damaged  ?  What  the  rule  where  insurer 
is  exonerated  from  liability  under  certain  percentage  of  loss  ?  What,  in 
a  legal  sense,  is  a  stranding  of  a  vessel  ?    Does  a  representation  form  a 


308  QUESTIONS. 

part  of  the  policy  ?  Is  it  generally  found  in  the  policy  ?  What  does  it 
relate  to  ?  What  is  it  defined  to  be  ?  May  it  be  inserted  in  policy  and 
yet  bo  representation  ?  When  does  this  occur  ?  IIow  may  parties  make 
it  so  ?  What  is  a  positive  material  representation  deemed  ?  How,  if  a 
misrepresentation  or  concealment  ?  What  if  it  occurred  through  mis- 
take, neglect,  or  accident  ?  What  if  loss  arises  from  some  cause  uncon- 
nected with  misrepresentation  or  concealment  ?  When  will  fraudulent 
representation  avoid  policy  ?  What  is  the  difference  between  fraudulent 
misrepresentation  and  one  originating  in  mistake  ?  On  what  ground,  in 
latter  case,  does  it  affect  it  ?  What  must  misrepresentation  relate  to  ? 
What  kind  of  statement  and  how  made,  will  not  affect  the  policy  f  How, 
if  made  in  bad  faith,  and  with  fraudulent  intent  ?  What  must  misrepre- 
sentation relatO'  to  ?  How,  if  in  the  nature  of  a  promise  ?  A  represen- 
tation to  whom,  is  suflScient  ?  To  whom  does  it  extend  ?  And  whom 
aftect"?  What  the  reason  ?  How  subsequent  underwriter  upon  a  differ- 
ent policy  ?  Who  decides  upon  materiality  and  necessity  of  representa- 
tion? What  must  insured  communicate  to  insurer?  What  is  he  not 
bound  to  communicate?  What,  if  he  have  particular  information? 
What  is  insurer  bound  to  know  ?  What  is  the  general  rule  ?  How,  if 
assured  acquires  knowledge  of  material  fact  after  giving  instructions,  and 
before  insurance  ?  How,  if  insurance  effected  on  application  of  agent  ? 
How  does  assured  become  responsible  for  representation  or  concealment 
by  agent  ?  How  many  kinds  of  warranty  ?  What  is  the  express  ?  What 
does  warranty  dispense  with  ?  How  differ  from  representation  ?  What 
in  the  nature  of  ?  What  require  ?  How  must  performance  be  ?  What 
is  breach  equivalent  to  ?  What  required  by  all  conditions  precedent  ? 
What  is  necessary  in  regard  to  a  representation  ?  What  is  competent 
for  parties  ?  What  is  the  first  common  subject  of  warranty  ?  What 
necessary  imder  such  a  warranty  ?  What  the  second  subject  ?  What 
the  third  ?  What  the  object  of  that  ?  What  the  fourth  ?  Neutral  at 
what  time  ?  What  the  fifth  ?  What  is  the  first  implied  warranty  men- 
tioned ?  What  does  this  embrace  ?  What  effect  of  breach  of  this  at 
commencement  of  risk  ?  How  with  defect  of  sea-worthiness  arising 
afterwards  from  bad  faith,  or  want  of  prudence  ?  How  affect  contract 
as  to  other  risk  or  loss  ?  Are  there  different  kinds  of  sea-worthiness  ? 
What  are  they  ?  What  construed  in  reference  to  ?  What  is  the  rule 
admitting  of  no  exception  ?  What  if  ship  be  unseaworthy  at  commence- 
ment, and  defect  be  cured  before  loss  ?  What  another  instance  of  implied 
warranty?  What  application  of  this  principle?  What  must  insured 
provide  himself  with,  to  assert  national  character  ?  What  the  conse- 
quence of  omission?  What  difference  between  express  and  implied 
warranty  of  documentation? 


THE   PERILS   INSURED   AGAINST.  309 

f 

PAET  IV. 
THE  XATUKE   OF   THE  PEBILS   IK8TTEKD  AGAINST. 

§  554.  "We  here  find  the  undertaking  of  the  insurer,  that 
which  forms,  on  his  part,  the  consideration  for  his  receii)t 
of  the  premium.  The  nature  and  extent  of  these  perils 
depend  upon  the  agreement  of  the  parties.  The  assured 
may  legally  protect  himself  against  all  losses  except  those 
which  are  repugnant  to  public  policy,  or  positive  prohibi- 
tion, or  which  are  occasioned  by  his  own  wilful  misconduct 
or  fraud.  Tlie  perils  insured  against  are  all  expressed  or 
comprehended  in  the  policy.  They  are  enumerated  as  those 
"  of  the  seas,  men-of-war,  fire,  enemies,  pirates,  rovers, 
thieves,  jettisons,  letters  of  marque  and  counter  marque, 
surprisals,  takings  at  sea,  arrests,  restraints,  and  detainments 
of  all  kings,  princes,  and  people,  of  what  nation,  condition, 
or  quality  soever ;  barratry  of  the  master  and  mariners,  and 
all  other  perils,  losses,  and  misfortmies,  that  have,  or  shall, 

come  to  the  hurt  or  deti'iment,  or  damage  of  the  said 

or  any  part  thereof."  This  is  the  clause  generally  made  use 
of  to  cover  the  perils  insured  against.  Tlie  latter  part  of  it 
"  and  all  other  perils,"  &c.,  has  not  the  effect  to  cover  all 
losses  that  may  occur  from  whatever  cause,  but  it  is  re- 
stricted to  losses  of  a  similar  nature,  and  arising  from  simi- 
lar causes  to  those  which  are  enumerated.  Its  use,  therefore, 
is  to  generalize  those  enumerated,  so  that  all  causes  or  occa- 
sions of  loss  should  be  enumerated  or  referred  to  in  the  policy. 

§  555.  The  term  iKrils  of  the  sea,  include  all  losses  occa- 
sioned strictly  by  sea  damage,  such  as  stress  of  weather, 
winds  and  waves,  lightning  and  tempest,  rocks,  sands,  &c. 
It  is  meant,  however,  only  to  guard  against  extraordinary 
perils,  and  not  those  to  which  a  ship  is  ordinarily  exposed  ; 
for  if  a  loss  occur  from  the  latter,  it  will  be  from  unseawor- 
thiness of  the  vessel,  or  from  such  culjiable  neglect  or  mis- 
conduct of  master  or  crew  as  should  not  render  the  insurer 


310       OKDINAKY  AND  EXTEAOEDINAKY  PERILS. 

responsible.  It  does  not  cover  losses  flowing  from  tlie  ship's 
ordincary  employment,  or  the  inherent  infirmity  of  the  arti- 
cle, and  hence  in  a  policy  on  a  cargo  of  slaves,  the  insurer 
was  not  held  liable  for  a  loss  occasioned  by  their  insurrection, 
a  loss  from  that  cause  being  adjudged  to  be  one  arising  from 
the  inherent  vice  of  the  subject  insured.  McCargo  v.  Mer- 
chants Ins.  Co.  10  Robertson  {La.)  Rep.  202-334.  So,  also, 
all  losses  arising  from  the  wear  and  tear  of  the  ship  or  its 
equipments,  her  destruction  by  worms,  or  loss  of  anchors  by 
fi'iction  of  the  rocks,  are  none  of  them  covered  by  insurance. 
A  loss  occasioned  by  rats  is  more  difficult  of  determination, 
and  has  occasioned  some  diversity  of  decision.  The  general 
opinion  seems  to  be,  that  this  is  a  loss  for  which  the  insurer 
is  not  liable,  although  a  difierent  principle  is  adopted  in 
Pennsylvania.     Garrigues  v.  Coxe.,  1  Binn.  692. 

§  556.  The  dividing  line  between  ordinary  and  extraor- 
dinary perils  is  very  difficult  of  ascertainment  in  many 
cases.  If  the  ship  be  run  down,  or  a  loss  be  occasioned  by 
her  taking  the  ground  on  the  uneven  bed  of  a  dry  harbor, 
it  is  reckoned  a  peril  of  the  sea.  So,  also,  if  there  occurs  a 
loss  of  animals,  killed  by  the  agitation  of  the  ship  in  a 
storm.  To  avoid  as  much  difficulty  as  possible  upon  this 
point,  the  courts  have,  with  great  unanimity,  adopted  the 
rule,  that  the  peril,  whatever  it  may  be,  upon  which  the 
policy  attaches,  must  be  the  proximate  and  not  the  remote 
cause  of  the  loss,  thus  adoj)ting  the  maxim  causa  proxima 
no7i  remota  spectatur.)  and  the  reason  for  it  given  by  Lord 
Bacon,  that  "  it  were  infinite  for  the  law  to  consider  the 
causes  of  causes,  and  their  impulsions  one  of  another ; 
therefore,  it  contenteth  itself  with  the  immediate  cause." 
Tliis  point  has  been  several  times  tested  by  the  fact  of  a 
collision  between  two  vessels  by  which  one  was  injured,  and 
the  colliding  vessel  having  been  compelled  by  a  judicial 
sentence  or  decree  to  pay  the  damages,  its  owners  have 
sought  to  make  the  insurer  liable  for  the  payment  of  such, 
damages.     The  liability  here,  has  been  a  question  exten- 


WHEN   MISSING   VESSEL  PRESUMED   DESTROYED.  311 

sjvelj  discussed,  both  in  the  United  States  Court,  and  in 
several  of  the.  State  courts.  The  decision  has  very  uni- 
formly been  that  although  the  collision  is  a  peril  within  the 
policy,  and  any  loss  occasioned  by  it  is  therefore  a  loss  for 
wliicli  the  insurer  is  liable,  yet  the  sentence  or  decree 
awarding  damages  is  not,  and  as  that  is  the  proximate  cause 
of  loss,  the  insurer  is  not  liable.  General  Mutual  Insurance 
Company  v.  Shencood,  l^Hmo.  S.  C.  Rep.  351.  2faitheics 
V.  The  llovmrd  Insurance  Company^  1  Kern.  9.  The  point 
was  decided  directly  the  reverse  in  Massachusetts  in  Nelson 
V.  The  Suffolk  Insurance  Company^  8  Ciish.  477,  but  unfor- 
tunately this  case  placed  much  reliance  upon  the  two  last- 
mentioned  cases,  the  decisions  in  both  of  which  were  subse- 
quently reversed,  the  one  in  the  highest  court  of  the  Union, 
the  other  in  that  of  the  State^of  ]S'ew  York.  Another 
illustration  of  the  same  rule  or  principle  occurs  where  a  ship 
is  driven  ashore  by  the  wind,  and  then  cajDtured  by  an 
enemy.  The  loss  is  imputable  to  the  capture,  the  proximate 
cause,  and  not  to  the  stranding.  Another  still,  is  found  in 
a  case  where  a  partial  loss  is  followed  by  a  total  one.  It  is 
the  latter  that  is  alone  regarded  by  the  law,  the  fonner  being 
entirely  merged  in  it. 

§  557.  The  question  is  very  likely  to  arise  when  a  miss- 
ing vessel  shall  be  presumed  to  have  perished  by  a  peril  of 
the  sea.  Tliis  question  must  necessarily  depend  upon  such 
an  infinite  variety  of  circumstances,  that  no  23recise  time  is 
fixed  upon  by  the  English  law.  Each  case  must  be  governed 
by  its  own  circumstances,  but  after  a  sufficient  length  of 
time  has  elapsed  to  adjudge  the  missing  vessel  lost,  "  that 
loss  is  j^resumed  to  have  happened  immediately  after  the 
date  of  the  last  news  ;  so  that  if  an  insurance  be  for  three 
mouths,  and  the  vessel  not  being  heard  from,  a  further  in- 
surance is  made  for  a  year,  and  the  vessel  is  never  heard 
from,  in  that  case  the  first  insurer  pays  the  loss." 

§  558.  One  of  the  perils  usually  insured  against,  hjire., 
and  it  is  not  material  what  occasioned  it.     It  may  result 


312  BARRATKY   AS   A   PERIL   INSURED   AGAINST. 

from  accident,  or  liglitning,  or  any  act  done  in  the  perform- 
ance of  duty.  It  has  even  been  held,  hut  after  a  very  long 
discussion,  that  the  insurer  is  liable  where  the  fire  which  oc- 
casions the  loss  occurs  through  the  negligence  of  the  master 
and  mariners.  Bmh  v.  Royal  Exchange  Assurance  Cmn- 
pany^  2  Bam.  cfe  Aid.  Y3.  See  also,  in  this  country,  Patapsco 
Ins.  Comixiny  v.  Coulter,  3  Peters' s  U.  S.  Rep.  222.  But 
if  goods,  when  put  on  board,  arc  in  such  a  damaged  state 
that  they  are  liable  to  efiervesce,  and  thus  in  fact  generate 
the  fire  by  which  they  are  consumed,  the  insurers  are  not 
liable  for  the  loss. 

§  559.  Another  of  those  perils  is  'barratry  by  the  master 
and  mariners.  This  includes  every  species  of  fraud  or  in- 
tentional breach  of  duty  on  the  part  of  the  master,  in  his 
character  of  master,  oi'  o#  the  mariners,  concerning  either 
the  ship  or  cargo.  It  embraces  every  breach  of  trust  by 
either  one  of  these,  which  is  committed  with  dishonest 
views.  As  these  are  all  agents  or  employees  of  the  assured, 
and  subject  to  his  control,  it  is  singular  that  their  vicious  acts 
should  ever  have  become  a  subject-matter  of  insurance,  and 
among  some  of  the  continental  powers  of  Em'ope  this  is  not 
a  risk  insured  against.  The  following  are  instances  of  bar- 
ratry. A  wilful  deviation  in  the  voyage,  committed  in 
fraud  of  the  owner ;  smuggling,  running  away  with  the 
ship,  sinking  or  deserting  her,  defeating  or  delaying  the 
voyage  with  a  criminal  intent,  dropping  an  anchor  with  a 
fraudulent  intent,  sailing  out  of  port  in  violation  of  an 
embargo,  or  without  paying  the  port  duties,  are  all  acts  of 
barratry,  being  wilful  breaches  of  duty  by  the  master. 
Tliis  can  only  be  committed  by  some  one,  not  the  owner, 
who  is  in  charge  of  the  ship  ;  and  it  cannot  arise  through 
ignorance  or  inattention,  as  it  must  originate  in  a  vicious 
motive,  although  whether  that  be  to  benefit  himself  or  to 
injure  the  owner,  is  entirely  immaterial.  !N^or  is  it  essential 
that  the  loss  should  be  contemporaneous  with  the  barratry. 
But  it  must  occur  during  the  voyage  insured,  and  hence 


OF  THE   PERILS  mSUKED  AGAINST.  313 

•srhen  a  barratry  Tvas  committed  by  smuggling,  for  •which, 
the  ship  was  seized,  but  not  until  after  she  had  been  moored 
twenty-four  hours  in  safety  at  her  destined  port,  the  insurer 
was  held  not  liable.  Lockyer  v.  Ojjiey,  1  Term.  Bep.  251. 
The  point  has  been  presented  whether  a  loss  was  chargeable 
upon  the  insurer  which  was  occasioned  remotely  by  the 
negligence  or  misconduct  of  the  master,  not  amounting  to 
barratry,  but  immediately  by  some  other  peril  in  the  policy 
operating  directly  upon  the  property.  Although  it  was 
held  so  chargeable  in  Fulton  y.  The  Lancaster  Ohio  Insur- 
ance Company^  7  Ohio  Rep.  part  2,  1-25,  yet  the  nile  that 
the  proximate,  and  not  the  remote  cause  is  to  govern,  may 
now  be  regarded  as  the  settled  policy  of  both  English  and 
American  law.  Walter  v.  Maitland^  5  Barn,  cfc  Aid.  171. 
See  cases  refeiTcd  to  in  §  556. 

§  560.  Other  perils  insured  a^inst  are  pirates,  rovers, 
and  thieves.  Under  the  latter  term,  wlien  insured  against 
hy  name,  the  elementary  writers  understand  that  it  is  limited 
to  that  theft  which  is  accompanied  by  violence,  and  docs 
not  extend  to  simple  theft,  and  it  is  so  laid  down  by  Chan- 
cellor Kent,  see  3  Kenfs  Comm.  303.  But  the  point  came 
expressly  up  in  the  Court  of  En-ors  in  the  State  of  New 
York  in  The  American  Insurance  Company  of  Neio  York 
V.  Bryan,  26  Wend.  563,  and,  after  much  discussion,  it  was 
decided  that  the  V7ord.'thieves  in  a  policy,  covers  a  loss  occa- 
sioned by  a  simple  larceny,  unaccompanied  by  open  force 
or  violence,  by  persons  other  than  the  master  or  crew  of  the 
ship  in  which  the  goods  were  transported. 

§  561.  Another  large  class  of  risks  is  included  under 
Takings  at  sea,  Arrests,  liestraints  and  Detainments  of  all 
Kings,  Pnnces,  and  People.  Tliese  refer  to  acts  of  govern- 
ment, the  term  people  signifying  the  niling  power  of  a 
country,  whatever  it  may  be.  One  of  the  most  usual  of 
this  kind  of  detainments  is  an  emhargo,  which  is  aiL  aiTCst 
laid  on  ships  or  merchandise  by  public  authority,  or  State 
prohibition  ;  and  whether  of  one's  own  or  a  foreign  govern- 


314  OF   THE  TEKILS  INSUEED  AGAINST. 

ment  is  immaterial.  A  question  has  arisen  licrc,  "wlietlier  a 
foreigner  could  claim  against  a  British  underwriter  in  a 
matter  founded  on  the  act  of  his  owti  State,  upon  the  ground 
that  he  is  to  be  deemed  a  party  to  the  acts  of  his  own  gov- 
ermnent.  But  in  Bassett  x.  Meyer,  5  Taunt.  824,  it  was  held 
no  objection  to  the  insured's  right  of  recovery  that  the  loss 
happened  by  the  act  of  the  government  of  his  country, 
though  he  and  the  insurer  were  subjects  of  different  States. 
The  same  principle  has  been  fully  sustained  in  this  country, 
and  the  doctrine  affirmed  that  a  subject  was  not  to  be  deemed 
a  party  to  the  legislative,  and  much  less  to  the  judicial  acts* 
of  his  own  country,  so  as  to  deprive  him  of  remedy  on  a 
.  policy  by  a  foreign  insurance  office,  by  reason  of  any  acts 
or  judgments  of  his  own  country.  Francis  v.  Ocean  In- 
stance Company,  6  Cowen,  404,  and  affirmed  on  error  in  2 
Wend.  64.  Whether  a  hlochacle  is  a  sufficient  restraint  of 
trade  has  been  a  matter  of  doubt,  on  the  ground  that  the 
peril  producing  the  loss  must  act  immediately  upon  the 
subject  insured,  and  that  the  mere  fear  of  capture,  although 
just,  is  not  sufficient.  But  the  prevailing  opinion  now  is, 
that  a  blockade  of  the  port  of  destination,  interdicting  all 
commerce  with  it,  is  a  sufficient  peril  within  the  policy. 
Smidt  V.  The  United  Insurance  Company,  1  Jolin.  Hep. 
249. 

QUESTIONS. 
"What  do  Ihe  perils  insured  against  depend  upon?  Against  what 
mav  the  assured  legally  protect  liimself  ?  "Where  are  the  perils  insured 
against  to  be  found  ?  "What  are  they  ?  "What  effect  does  insertion  of 
"all  other  perils,"  &c.  have?  "What  do  perils  of  the  sea  include? 
"What  perils  are  meant  ?  "What  does  it  not  cover  ?  Ho-^v  is  it  with  loss 
occasioned  by  rats?  "What  are  some  instances  of  perUs  of  the  sea? 
"What  the  rule  adopted  as  to  peril  being  proximate  or  remote  cause  of 
loss  ?  "What  the  maxim  governed  by,  and  reason  of  it  ?  How  has  this 
point  been  tested  ?  How  has  the  decision  very  uniformly  been  ?  "What 
other  illustration  of  the  same  rule  or  principle  ?  What  other  still  ? 
"When  is  a  missing  vessel  presumed  to  have  perished  by  a  peril  of  the 
sea  ?  "When  is  the  loss  presumed  to  have  happened  ?  "When  a  fire  causes 
2oss,  is  it  material  what  occasioned  it  ?    "What  may  it  result  from  ?    Is 


DESCRIPTION  OF  VOYAGE  IN  POLICY.  315 

insurer  liable  when  the  loss  occurs  through  the  negligence  of  the  master 
and  mariners  ?  How,  when  goods  effervesce,  and  generate  fire  ?  "What 
does  barratry  include  ?  What  embraced  within  it  ?  What  are  some 
instances  of  barratry  ?  By  whom  must  this  be  committed,  and  in  what 
originate  ?  When  may  loss  occur  ?  What  illustration  ?  Are  losses  by 
thieves  limited  to  cases  accompanied  with  violence  ?  Does  it  embrace 
simple  larceny  unaccompanied  by  violence  ?  What  do  restraints,  ar- 
rests, and  detainment  by  kings,  princes,  and  people  refer  to  ?  What 
does  the  term  people  signify  ?  What  is  one  of  the  most  common  detain- 
ments ?  What  is  an  embargo  ?  Can  a  foreigner  claim  a  right  founded 
on  the  act  of  his  own  State  ?  Is  a  tlocTcade  a  sufficient  restraint  of  trade 
to  be  a  peril  insured  against  ?    How  is  it,  Avhen  of  port  of  destination  ? 

PART  V. 

THE  VOYAGE  EMBEACED   IN   THE  POLICT. 

§  562.  An  insurance  may  be  on  time,  or  on  a  ship  for  a 
particular  voyage.  Wlien  a  slii^)  or  cargo  is  insured  for  a 
term  of  time,  tlie  termini  of  risk  are  the  day  and  hour  speci- 
fied at  which  the  insurance  commences  and  terminates. 
The  place  either  of  departure  or  of  destination  is  then  im- 
material, and  no  questions  relating  to  deviation  can  arise. 
In  this  kind  of  policy  a  clause  is  often  inserted,  providing 
that  if  the  vessel  be  at  sea  at  the  expiration  of  the  time, 
the  policy  shall  contmue  in  force  until  she  arrives  at  her  port 
of  destination. 

§  563.  Li  the  other  kind,  or  policy  on  a  ship  for  a  partic- 
ular voyage,  great  nicety  is  required  in  accurately  de- 
scribing the  voyage.  This  includes  not  only  a  statement  of 
the  times  and  places  at  which  the  risk  is  to  begin  and  end, 
but  also  usually  the  intermediate  places  at  which  the  vessel 
may  be  allowed  to  call.  A  ship  may  be  insured  on  a  voyage 
out,  or  in,  or  out  and  in  /  or  for  any  part  of  the  voyage, 
specifying  particularly  what  part,  or  from  2>ort  to  port.  A 
ship  insured  at  and  from  a  certain  port,  will  cover  all  risks 
while  taking  in  its  cargo  at  the  port ;  but  if  insured  from 
such  a  port,  it  must  break  ground  before  the  risk  com- 
mences.    The  insurance  at  imdifrorn  implies  either  that  the 


316  rOLICY   ON   OUTWAKD   A2^D   HOMEWAED   VOYAGE. 

sliip  is  at  the  place  named  at  the  time  of  tlie  insurance,  or 
that  she  will  arrive  there  in  good  condition. 

§  564.  There  are  often  distinct  policies  on  the  outward 
and  homeward  voyage,  and  in  such  case  if  the  ship  were  to 
l^erish  in  a  foreign  port  with  portions  of  her  outgoing  and 
return  cargo  on  board,  there  might  be  a  conflict  between 
the  policies  ;  but  it  is  presumed  that  each  policy  would 
j)rotect  such  portions  of  each  cargo  as  were  on  board  at  the 
time  of  the  disaster.  The  risk  on  the  cargo  is  generally 
limited  to  continue  imtil  it  shall  be  discharged  and  safely 
landed.  But  in  such  case  there  should  be  no  unnecessary 
delay,  and  as  policies  are  construed  according  to  long-con- 
tinued and  well-settled  usage  and  custom,  if  it  be  the  usual 
course  to  carry  goods  from  the  ship  to  the  shore  in  a  lighter 
or  smaller  vessel,  and  they  are  injured  while  in  such  transit, 
the  insurer  must  make  good  the  loss.  But  if  the  assured 
take  charge  of  them,  sending  them  in  his  own  lighter,  or  in 
one  specially  employed  by  him,  the  insurer  would  be  dis- 
charged. The  insurance  is  always  designed  to  protect  the 
cargo  while  actually  on  board  the  ship,  but  if  it  be  tempo- 
rarily landed  from  necessity  during  the  voyage,  it  is  still 
protected  by  the  policy. 

§  565.  "Where  the  insurance  is  upon  the  outward  cargo 
and  upon  a  return  cargo,  the  latter  to  he  derived  from,  the 
proceeds  of,  the  former^  it  has  been  made  a  question  what 
kind  of  return  cargo  may  come  under  the  protection  of  the 
policy.  It  is  clear  that  the  same  goods  returned  in  the  same 
vessel  would  not  come  within  its  protection,  but  if  the  re- 
turn cargo  be  procured  by  the  sale  or  exchange  of  the  out- 
ward cargo,  or  even  by  a  deposit  of  the  outward  cargo  and 
a  credit  raised  upon  it,  the  insurer  would  be  liable  in  case  of 
loss.    Hamn  v.  Oray^  12  Mass.  Yl. 

§  566.  Tlie  policy  usually  protects  the  vessel  until  she 
has  been  anchored  twenty-four  hom-s  in  safety,  and  this  has 
been  held  even  to  protect  against  a  seizure  made  after  that 
time,  although  for  an  act  of  smuggling  committed  during 


NATUBE  AND  EFFECT  OF  DEVIATION.  317 

the  voyage.  Lockyer  v.  Offiey^  1  Term.  Bep.  252.  If  the 
voyage  insured  be  to  a  country  generally,  the  risk  termi- 
nates at  the  first  port  made  for  the  purpose  of  unloading. 
If  it  be  insured  to  several  diflerent  places,  as  A,  B,  and  C, 
it  means  to  aU  or  any  of  them,  -with  the  qualification  that 
if  the  vessel  go  to  more  than  one,  she  must  visit  them  in 
the  order  in  which  they  are  mentioned  in  the  policy.  If 
the  voyage  be  to  or  fi*om  a  district  containing  several  ports, 
with  liberty  to  stop  at  any,  they  must  be  visited  in  their 
geographical  order. 

§  567.  The  nature  and  effect  of  deviation  from  the  pre- 
scribed course  often  comes  up  for  consideration  under  marine 
insurance.  It  is  a  departm-e  of  the  vessel  voluntarily,  and 
without  necessity,  from  the  usual  course  of  the  voyage,  and 
the  effect  of  it  is  to  discharge  the  insurer,  as  it  is  the  substi- 
tution of  a  new  voyage  in  the  place  of  the  one  the  risks  of 
which  he  had  assumed.  The  exemption  of  the  insurer 
grows  out  of  the  violation  of  his  contract  by  the  assured, 
and  so  strictly  is  the  doctrine  maintained,  that  where  a 
vessel  sailing  down  the  Frith  of  Forth,  and  having  liberty 
to  touch  at  one  place,  touched  at  another  in  its  stead, 
equally  in  her  way,  it  was  held  to  be  a  fatal  deviation. 
Elliot  V.  Wilson,  i  Bro.  P.  C.  459. 

§  568.  A  deviation  from  necessity  will  not  discharge  the 
insurer.  But  it  must  be  limited  to  the  necessity  that  pro- 
duced it,  and  if  so,  it  will  be  justified,  although  on  account 
of  a  peril  not  insured  against.  Instances  of  this  are,  when 
done  from  stress  of  weather,  or  to  procure  necessary  repairs, 
or  to  avoid  capture  or  detention.  It  is  a  point  not  yet  en- 
tirely settled  whether,  or  how  far,  a  deviation  may  be  held 
justifiable,  the  object  of  which  is  to  relieve  a  vessel  in  dis- 
tress, or  to  save  the  goods,  or  even  lives  of  those  on  board ; 
but  the  prevailing  opinion  now  is,  that  if  done  for  the  for- 
mer, it  would  discharge  the  insurer,  but  if  for  the  latter,  it 
would  leave  him  liable.  Wherever  a  ship  is  compelled  by 
necessity  to  deviate  from  the  course  laid  down  in  the  policy, 


318  PKOCEEDINGS   IN   EVENT   OF   LOSS. 

tlie  whole  remainder  of  the  voyage  must  be  under  the  con-  N 
trol  of  necessity,  and  must  be  pursued  in  the  most  direct 
course,  and  within  the  shortest  time,  or  it  will  amount  to  a 
deviation,  and  discharge  the  insurer.  Lavdbre  v.  Wilson^ 
Doug.  284.  The  grounds  upon  which  deviations  are  claimed 
not  to  discharge  the  insurer  are  usage,  necessity,  and  the 
true  construction  of  the  policy.  Usage,  however,  can  never 
be  claimed  to  justify  it  when  in  conflict  with  the  clear  and 
positive  terms  of  the  policy. 

QUESTIONS. 
What  two  kinds  of  insurance  ?  When  on  time,  what  are  the  termini 
of  the  risk  ?  Are  place  and  deviations  considered  in  such  insurance  ? 
What  clause  is  often  inserted  ?  What  is  required  in  policy  on  a  ship  for 
a  voyage  ?  What  does  this  statement  include  ?  How  may  a  ship  be 
insured  ?  What  does  insurance  at  and  from  cover  ?  When  does  insur- 
ance/rom  commence  ?  What  does  insurance  at  and  from  imply  ?  What 
are  there  often  distinct  policies  on  ?  What  conflict  does  this  sometimes 
lead  to  ?  How  settled  ?  What  is  risk  on  cargo  limited  to  ?  How  are 
policies  construed  ?  Who  bears  loss  sustained  when  goods  are  carried 
from  vessel  to  shore  in  lighters  ?  When  does  insurance  protect  cargo  ? 
How,  if  temporarily  landed  from  necessity  ?  When  insurance  is  on 
return  cargo  as  proceeds  of  outward  cargo,  to  what  does  it  not,  and  to 
■what  does  it  have  application  ?  How  long  does  policy  usually  protect 
vessel  ?  What  illustration  ?  If  voyage  be  insured  to  a  country  gen- 
erally, when  does  risk  terminate  ?  How,  when  insured  to  several  differ- 
ent places?  What  is  a  deviation?  What  the  effect  of  it?  Why? 
WhAt  does  exemption  of  insurer  grow  out  of?  What  instance  in  illus- 
triftion?  What  effect  of  deviation  from  necessity?  To  what  is  it 
limited  ?  What  instances  ?  What  rule  where  deviation  is  to  save  goods 
or  life  ?  What  are  the  grounds  upon  which  deviations  are  claimed  not 
to  discharge  insurer  ?    How  in  regard  to  the  claim  of  usage  ? 

PART  VI. 

PBOCEEDIXGS  IN  THE   EVENT  OF   L0S3. 

§  569.  No  difficulty  ordinarily  occurs  in  the  case  of  in- 
surance except  in  the  event  of  loss,  and  then  the  first  point 
to  be  settled  is  whether  it  be  a  total  or  a  partial  one.  As 
the  whole  of  insurance  is  summed  up  in  indemnity,  it  is  im- 


WHEN   INSUEED   MAY   ABANDON.  319 

possible  to  apply  any  remedy  -without  first  ascertaining  the 
character  and  extent  of  the  loss.  A  total  loss  may  be  of 
two  kinds.  It  is  either  total  per  se,  in  which  the  thing  insured 
is  utterly  destroyed,  or  wholly  lost  to  the  assured,  or  it  is 
such  as  may  be  rendered  total  by  abandonment,  in  which 
the  subject-matter  of  insurance  is  destroyed  or  lost  to  the 
assured,  to  such^n  extent  as  to  justify  a  relinquishment  of 
whatever  may  be  saved,  to  the  insurer.  Instances  of  th^ 
former  are  where  the  ship  insured  is  destroyed  by  fire,  or 
by  perils  of  the  sea,  or  by  any  other  means  ceases  to  exist 
in  specie,  and  so  also  where  the  assured  is  deprived  of  it  by 
capture. 

§  570.  The  first  question  of  importance  that  arises  here, 
relates  to  the  circumstances  under  which  the  assured  may 
exercise  the  right  to  abandon  to  the  insurer.  The  rule  is, 
that  if  the  ship  or  goods  insured  be  damaged  to  more  than 
half  the  value,  by  any  of  the  perils  insured  against,  the  as- 
sured may  abandon  and  recover  as  for  a  total  loss.  Tlierc 
may  be  a  separate  abandonment  of  part  of  the  cargo  in- 
sured where  a  part  only  of  it  is  lost  or  damaged  above  a 
moiety  in  value,  provided  the  insurance  was  originally  upon 
each  article  separately,  but  not  if  it  be  upon  difierent  kinds 
of  goods  indiscriminately,  or  as  one  entire  parcel.  The 
value  here  meant  is  the  market  value  at  the  time  of  the 
disaster  which  occasioned  the  loss.  Tlie  amount  of  the 
injury  done  to  the  ship  is  determined  by  the  expense  of  tiic 
repairs  at  the  port  of  necessity,  including  that  of  getting 
the  ship  afloat  if  stranded. 

§  571.  In  order  to  know  what  to  abandon,  it  is  necessary 
to  have  clearly  settled  what  is  the  subject-matter  insured  ; 
and  in  reference  to  this  no  difliculty  has  occurred  except 
where  a  shfj?  is  injured  for  a  voyage  /  and  in  that  case 
much  difliculty  has  been  experienced  in  determining  wliich 
is  insured,  the  ship  or  the  voyaye.  In  Pole  v.  Fit2gei\dd, 
decided  in  the  House  of'  Lords,  5  Bro.  P.  C.  137-142,  it 
was  held  that  the  insurance  was  of  the  ship,  and  not  of  the 


320  INSURANCE   ON   SHIP   AND   ON   CARGO. 

voyage,  Jiiid  hence  if  the  ship  arrived  safe,  there  could  be 
no  abandonment  althongh'the  voyage  was  lost.  But  the 
King's  Bench,  under  the  lead  of  Lord  Mansfield,  aftenvards 
established  the  contrary  doctrine,  that  where  a  ship  was  in-  . 
sured  for  a  specified  voyage,  a  loss  of  either  the  ship  or  the 
voyage,  was  the  same  thing,  and  justified  an  abandonment. 
Tlie  principle  settled  in  Pole  v.  Fitzgerald  having  been  men- 
tioned approvingly  in  Goold  v.  Shaw,  1  John,  cases  293-309, 
and  adopted  in  England  in  Uadkinson  v.  JRobinson,  3  Bos. 
<&  Pid.  388,  and  in  2  Maule  <&  Selwin,  239,  may  now  prob- 
ably be  considered  as  generally  adopted.  A  loss  of  the 
voyage  as  to  the  cargo  is  not  so  as  to  the  ship,  for  a  policy 
on  a  ship  is  an  insurance  upon  that  for  the  voyage,  and  not 
one  on  the  ship  and  the  voyage.  And  if  an  insured  ship 
be  so  injured  by  a  peril  insured  against,  as  to  prevent  her 
proceeding,  and  thus  the  Voyage  be  lost,  it  is  a  total  loss  of 
ship,  freight,  and  cargo. 

§  572.  Care  must  be  taken  to  distinguish  the  difference 
between  an  insurance  on  the  ship  and  one  on  the  cargo.  A 
total  loss  of  the  latter  may  arise  not  only  out  of  its  destruc- 
tion, but  also  out  of  the  total  incapacity  of  the  ship  to  per- 
form the  voyage.  But  a  temporary  loss  or  retardation  of 
the  voyage  will  not  amount  to  a  total  loss  of  the  cargo 
unless  it  be  of  a  perishable  nature.  It  must  not,  therefore, 
be  assumed  that  if  the  voyage  is  lost,  there  can  be  an  aban- 
donment of  the  cargo.  Neither  is  the  latter  necessarily 
connected  with  the  ship  ;  but  where  the  ship  was  forced 
back  by  stress  of  weather,  and  the  cargo  was  found  in  such 
a  damaged  condition  that  it  could  not  be  sent  on  with  safety, 
an  abandonment  was  held  good.  Gernon  v.  Royal  Exchange 
Assurance,  6  Taunt.  383. 

§  573.  There  is  no  little  amount  of  difficulty  experienced 
in  settling,  in  a  contested  case,  whether  the  right  to  abandon 
exists  or  not.  It  is  said  that  a  loss  to  a  greater  extent  than 
a  moiety  will  justify  an  abandonment.  But  what  will  justify 
the  conclusion  that  there  is  such  a  loss  ?     Is  it  the  iolbrma- 


%VTTAT  GIYES  THE   EIGHT  TO  ABADTDON.  321 

tion  of  the  assured  to  that  efiect,  or  must  it  be  the  actual 
facts  existing  at  the  time  ?  Is  it  strong  probabiHties  upon 
which  the  assured  is  at  liberty  to  act,  or  must  he  go  further, 
and  anchor  his  convictions  only  within  the  empire  of  cer- 
tainty ?  Tlie  former  is  very  clearly  the  English  rule.  In 
this  country  there  is  a  strong  disposition,  and  the  tendency 
seems  to  be  to  adopt  the  latter.  From  an  examination  of  the 
English  and  American  cases,  Mr.  Justice  Story,  in  PeeU  v. 
Merchants  Insurance  Company,  3  Mason,  27-36,  says  :  "  K 
there  be  any  general  principle  that  pervades  and  governs 
them,  it  seems  to  be  this,  that  the  right  to  abandon  exists, 
•whenever,  from  the  circumstances  of  the  case,  the  ship,  for 
all  the  useful  purposes  of  a  ship  for  the  voyage,  is,  for  the 
present,  gone  from  the  control  of  the  owner,  and  the  time 
when  she  will  be  restored  to  him  in  a  state  to  resume  the 
voyage  is  uncertain  or  unreasonably  distant,  or  the  risk  and 
expense  are  disproportioned  to  the  expected  benefit  and  ob- 
ject of  the  voyage.  In  such  case,  the  law  deems  the  ship, 
though  having  a  physical  existence,  as  ceasing  to  exist  for 
purposes  of  utility,  and  therefore  subjects  her  to  be  treated 
as  lost." 

§  574.  That  there  now  is,  or  eventually  will  be,  a  real 
difference  between  the  English  and  American  doctrine,  in 
accordance  with  the  questions  asked  in  the  last  section,  is 
rendered  jJretty  clear  from  the  difference  of  doctrine  between 
the  two  now  held  in  reference  to  the  character  of  the  aban- 
donment itself.  Tlie  English  construction  of  this  is — that  if 
an  abandonment  be  rightfully  made,  it  is  not  absolute,  but 
may  be  controlled  by  subsequent  events  ;  so  that  if  the  loss 
has  ceased  to  be  total  at  any  time  before  action  brought,  the 
abandonment  becomes  inoperative.  Tliis  is  carrying  out 
logically  the  principle  of  allowing  the  assm'cd  to  act  upon 
the  highest  probabilities  in  nuiking  the  abandonment.  The 
American  rule,  on  the  contrary,  is  that  "  an  abandonment 
once  rightfully  made,  is  binding  and  conclusive  between  the 
parties,  and  that  the  rights  flowing  from  it  become  vested 
21 


322  PROCEEDINGS  AS  TO  ABANDONMENT. 

riglits,  not  to  be  divested  by  any  subsequent  events ; "  thus 
carrying  out  logically  the  principle  of  requiring  the  as- 
sured to  base  his  action,  in  making  the  abandonment,  only 
upon  actual  facts  and  certainties.  The  English  rule,  how- 
ever, has  been  a  good  deal  shaken,  having  been  doubted  in 
the  House  of  Lords  by  Lord  Eldon  in  Smith  v.  Robertson^ 
2  Bow's  Bep.  4Y4,  and  still  more  in  Holdsworth  v.  Wise^  in 
7  Barn,  da  Cress.  Y94. 

§  575.  The  first  thing  the  assured  is  called  upon  to  do 
after  the  occurrence  of  the  disaster  is  to  examine  the  sub- 
ject-matter insured  to  ascertain  the  extent  of  the  injury, 
and,  if  the  case  be  a  proper  one,  to  determine  whether  he 
will  or  will  not  abandon.  As  the  American  rule  requires 
his  action  to  be  based  only  on  actual  facts  and  certainties, 
and  not  upon  mere  opinions  and  probabilities,  it  is  necessary 
for  him  to  make  a  very  thorough  examination,  and  to  come 
to  such  a  conclusion  as  the  facts  will  fully  sustain.  If  his 
conclusion  be  to  abandon,  the  next  thing  is  to  give  prompt 
notice  to  the  insurer  of  such  his  determination,  and  a  failure 
to  do  this  will  be  considered  as  waiving  his  right  to  aban- 
don, and  limit  him  to  recover  only  for  a  partial  loss.  His 
omission,  however,  will  not  be  construed  into  an  admission 
that  the  loss  is  less  than  a  moiety  of  the  value,  but  he  will 
be  at  liberty  to  recover  on  all,  except  memorandum  articles, 
what  he  can  show  to  have  been  the  actual  injury.  The  in- 
surer, upon  receiving  notice  of  the  loss  and  abandonment, 
must  decide  promptly  upon  his  reception  or  rejection  of  it, 
and  if  he  rejects  it,  must  give  immediate  notice  to  the  as- 
sured. 

§  576.  The  abandonment  must  be  of  the  whole  or  noth- 
ing. It  must  be  an  unconditional  cession  or  surrender  of 
the  subject-matter  insured,  and  all  the  rights  of  tlie  assm*ed 
in  relation  to  it  to  the  insurer.  It  may  be  by  parol  or  by  a 
written  notice,  but  in  either  case  should  state  the  ground 
upon  which  it  is  made,  describe  the  disaster  which  occa- 
sioned it,  and  disclose  truly  the  nature  and  extent  of  the 


EFFECT   OF   ABAJSTDONMENT.  323 

injury.  All  inquiries  made  by  the  insurer  relating  to  the 
peril  insured  against,  which  produced  the  loss,  and  to  the 
nature  and  extent  of  the  injury,  the  assured  is  bound  faith- 
fully and  fully  to  answer. 

§  577.  The  effect  of  an  abandonment  made  and  accepted 
is  to  divest  the  property  of  the  assured  in  the  subject-mat- 
ter, and  to  vest  it  wholly  in  the  insurer.  The  former  can 
subsequently  act  only  as  the  agent  of  the  latter.  A  question 
of  some  difficulty  has  arisen  as  to  the  party  entitled  to 
freight  where  there  has  been  an  abandonment  of  the  vessel 
short  of  the  place  of  destination,  and  by  means  of  repairs 
the  insurer  has  been  enabled  to  complete  the  voyage,  and 
deliver  the  cargo.  The  question  here  presented  will  be  the 
same  whether  the  freight  and  ship  have  been  separately  in- 
sured or  not.  The  only  difference  that  would  make  would 
be  in  the  parties,  the  insurer  of  the  freight,  in  case  of  its 
insurance  and  abandonment,  possessing  the  rights  and 
standing  in  the  place  of  the  insured.  Does  the  entire  freight, 
in  case  of  the  abandonment  of  the  vessel  and  acceptance  by 
the  insurer,  the  same,  then  being  in  the  process  of  earning, 
but  not  completely  earned,  belong  to  the  insurer,  or  must  it 
be  distributed  between  him  and  the  assured,  in  the  propor- 
tions in  which  they  have  respectively  performed  the  voyage  ? 
This  question  involves  a  great  and  very  imjDortant  principle, 
and  has  been  settled  differently  in  this  country  and  in  Eng- 
land. In  the  State  of  'New  York  it  was  decided  by  a  divi- 
ded court  in  The  United  Insurance  Co.  v.  Lenox.,  1  John, 
cas.  377,  and  affirmed  by  a  majority  of  the  Court  of  Errors 
in  2  John.  cas.  443,  that  in  case  of  abandonment  and  accept- 
ance of  the  ship,  and  the  voyage  is  subsequently  performed, 
and  the  freight  earned,  the  insurer  is  only  entitled  to  that 
proportion  of  the  freight  earned  subsequently  to  the  aban- 
donment, the  other  portion  belonging  to  tlic  assured.  This 
decision  was  carried  against  the  opinion  of  Chancellor  Kent. 
The  question  has  more  recently  come  up  in  England  in  Case 
V.  Davidson,  5  Maule  <&  Selwin.,  79,  and  affirmed  in  2  Brad. 


324  MODE  OF  AEKIVING  AT  PAETIAL  LOSS. 

d;  Bin(j.  379,  in  wliicli  there  were  two  separate  insurauces, 
one  of  freiglit,  and  another  of  the  ship,  and  accepted  aban- 
donment of  each,  and  it  was  held  that  "  an  ahandonment 
of  the  sld])  transferred  the  freight  as  an  incident  to  the  ship^ 
and  that  an  ahandonment  was  equivalent  to  a  sale  of  the 
ship  to  the  ohandoneeP  This  must  certainly  commend  itself 
as  the  sound  legal  doctrine^  although  the  equitable  may  be 
found  in  the  view  taken  by  the  New  York  Courts. 

§  578.  K partial  loss  is  where  a  part  only  of  the  subject- 
matter  of  insurance  meets  with  an  injury.  Under  some 
circumstances  that  which  was  once  total  may  become  par- 
tial, as  where  a  ship  is  captured  and  subsequently  escapes 
or  is  recaptured.  The  escape  or  recapture  converts  that 
which  was  once  total,  into  a  partial  loss.  Under  our  rules, 
however,  if,  while  captured,  there  was  an  accepted  aban- 
donment, that  would  effect  a  transfer  of  the  property,  and 
prevent  a  total  loss  from  ever  becoming  partial. 

§  579.  The  point  the  most  difficult  to  arrive  at  in  case 
of  partial  loss,  is  the  amount  of  the  injury,  the  sum  to  be 
paid.  There  are  several  questions  to  settle  in  order  to  get 
at  this.  The  first  is  the  true  value  of  the  subject  put  at 
risk ;  the  estimated  value  in  a  valued  policy  may  not  be 
conclusive  upon  the  parties  in  a  case  of  loss.  In  determin- 
ing this  question,  which  shall  be  taken  as  the  true  test — ^the 
sum  at  which  the  goods  insured  would  have  been  sold  had 
they  reached  the  place  of  destination,  thus  making  good  to 
the  insured  his  profits  as  well  as  outlay  of  capital ;  or  the  mar- 
ket value  of  the  goods  at  the  time  and  place  at  which  the 
risk  was  commenced,  and  the  expenses  then  incurred  ?  This 
latter  would  replace  the  assured  in  the  same  position  he  oc- 
cupied before  undertaking  the  adventure.  Although  the 
first  is  not  without  its  advocates,  yet  the  last,  upon  the  prin- 
ciple that  insurance  is  a  mere  indemnity  and  nothing  more, 
is  now  the  settled  rule  in  England  and  in  this  country. 
When  the  invoice  price  of  the  goods  is  equivalent  to  the 
market  value  at  the  time  and  place  where  the  risk  is  under- 


AMOUNT  OF  LOSS   HOW   ASCEETAINED.  325 

taken,  tliat  is  the  valuation  adopted.  The  invoice  price, 
prime  cost,  and  market  vahie,  are  in  most  cases  equivalent 
terms,  and  in  Le  Roy  v.  United  Insurance  Comjyamj^  7 
John.  343,  the  court  adopted  the  prime  cost  of  the  goods  as 
being  the  best  rule  to  test  this  value  in  reference  to  insur- 
ance. To  this  should  be  added  the  premium  of  insurance 
and  commission,  and  all  other  expenses  then  necessarily  or 
usually  incurred.  The  value  of  the  goods  thus  ascertained, 
is  the  important  element  in  arriving  at  the  lesser  value  to 
which  they  are  reduced  by  the  injury  sustained. 

§  580.  Tlie  goods,  after  being  damaged,  may  be  earned 
forward  to  their  place  of  destination,  and  then  the  question 
may  arise  how  the  amount  of  loss  shall  be  ascertained. 
The  amount  payable  by  the  insurer  is  then  arrived  at  by 
ascertaining  the  sum  at  which  the  goods  would  have  sold  if 
they  had  been  uninjured,  and  the  market  value  of  them  in 
their  damaged  state,  and  deducting  the  latter  from  the 
former.  This  does  not  afford  a  perfect  indemnity,  because 
we  have  here  another  disturbing  element,  and  that  is  freight. 
The  carrier  has  now  earned  the  price  of  carriage,  and  that  is 
payable  the  same  whether  the  goods  are  damaged  or  not. 
This,  although  treated  somewhat  as  an  open  question,  seems 
generally  understood  to  be  not  recoverable  of  the  insurer  ; 
and  to  remedy  this,  the  true  way  for  the  owner  is  to  insure 
the  sum  to  be  paid  on  the  freight  and  charges  at  the  port 
of  delivery. 

§  581.  Unless  there  is  a  stipulation  to  the  contrary  con- 
tained in  the  policy,  all  adjustments  of  a  general  average  in 
foreign  ports,  are  conclusive  both  upon  the  insurer  and  the 
assured.  In  settling  the  amount  of  losses  upon  memoran- 
dum articles,  if  the  limitation  in  the  policy  is  five  per  cent., 
the  great  point  is  to  determine  whether  the  amount  of  injury 
comes  up  to,  or  falls  below  the  point  of  limitation.  If  the 
partial  loss  comes  up  to  that  point,  the  insurer  pays  it,  to- 
gether with  all  the  expenses  in  arriving  at  it.  K  it  falls 
below  it,  he  pays  nothing,  the  assured  losmg  not  only  the 


326  IN   WIIAT  CASES  PEEMITJM  EETUKNED. 

amount  of  damage,  but  also  all  the  expenses  of  the  investi- 
gation. 

§  582.  The  adjustment  of  loss  is  only  final  between  the 
parties  upon  the  supposition  that  all  the  facts  bearing  upon 
it  have  been  fully  disclosed,  that  the  parties  are  laboring 
under  no  mistake,  and  that  no  fraud  has  been  practised  by 
either  party.  If  either  one  of  these  proves  not  to  have  been 
true,  a  re-adjustment  may  be  had  of  the  matter.  In  the 
case  of  injury  to  a  vessel  insured,  the  old  materials  are  ap- 
plied towards  the  payment  of  the  new,  as  far  as  they  will 
go,  and  by  deducting  their  value  from  the  gross  amount  of 
the  repairs,  and  allowing  the  deduction  of  one-thii-d  new  for 
old  upon  the  balance,  the  amount  due  from  the  insm-er  wiU 
be  ascertained.  In  regard  to  the  latter  deduction,  no  differ- 
ence is  made  in  this  country  if  the  vessel  injured  be  new, 
although  in  England  it  is  not  allowed  in  such  case  to  be 
made.  Where  a  peril  insured  against  forces  a  vessel  into 
port  to  be  repaii*ed,  all  the  expenses  attending  the  repair- 
ing are  borne  by  the  insurer. 

§  583.  As  payment  in  advance  of  the  premium  is  usu- 
ally required  as  the  condition  of  insurance,  the  cases  are  not 
unfrequent  in  which  the  assured  may  enforce  its  return. 
This  may  occur  in  the  following  cases : 

1.  AYliere  the  contract  of  insurance  turns  out  to  have 
been  void  db  initio. 

2.  Where,  for  any  reason,  the  risk  has  never  commenced. 

3.  Where  the  assured  turns  out  to  have  had  no  intei'est 
in  the  subject-matter  insured 

4.  Where  the  vessel  never  sailed  on  the  voyage  insm-ed, 
or  the  policy  became  void  by  the  failure  of  the  warranty. 

5.  If  the  insurance  cover  a  larger  interest  than  the  as- 
sured possessed,  there  may  be  a  ratable  return  of  the  pre- 
mium. But  the  premium  will  not  be  returned  if  the  risk 
once  commences,  or  if  there  be  any  fraud  on  the  part  of  the 
insured,  or  if  the  trade  be,  in  any  respect,  illegal. 


QUESTIONS.  327 

QUESTIONS. 
"WTiat  is  the  first  point  to  be  settled  in  case  of  loss  ?  T\Tiat  mnst  be 
first  ascertained  ?  How  many  kinds  of  total  loss  ?  TThat  are  the  two 
kinds  ?  "What  are  the  instances  named,  and  of  which  kind  ?  "What  is 
the  rule  in  relation  to  the  right  to  abandon  ?  "When  can  there  be  a  sep- 
arate abandonment  of  part  of  the  cargo?  "What  is  the  value  here 
meant  ?  How  is  the  amount  of  the  injury  done  to  the  ship  determined  ? 
When  a  ship  is  insured  for  a  voyage,  which  is  insured,  the  ship  or  the 
voyage  ?  What  results,  if  insured  ship  is  so  injured  as  to  lose  the  voy- 
age ?  Why  is  it  necessary  to  distinguish  between  insurance  on-  ship  and 
one  on  cargo  ?  Is  the  cargo  so  connected  with  the  ship  that  a  loss  of 
one  necessarily  leads  to  that  of  the  other  ?  What  will  justify  the  con- 
clusions that  goods  or  ship  are  damaged  to  the  extent  of  a  moiety  ?  Is 
it  information  or  actual  facts?  Strong  probabilities  or  certainties? 
What  is  the  English  rule  ?  What  the  American  ?  What  is  the  English 
rule  relating  to  abandonment  ?  What  the  American  ?  What  does  each 
logically  carry  out  ?  What  is  the  first  thing  the  assured  is  called  upon 
to  do  after  the  disaster  ?  If  his  conclusion  is  to  abandon,  what  is  the 
next  thing  he  is  to  do  ?  What  is  the  consequence  of  failure  to  do  this  ? 
Is  his  failure  regarded  as  any  admisssion  ?  What  will  he  be  at  liberty 
to  recover  on  ?  What  must  the  insurer  do  upon  receiving  notice  of 
abandonment  ?  What  if  he  rejects  it  ?  What  must  the  abandonment 
be  of?  What  must  it  be?  How  may  it  be  done?  Wliat  should  the 
notice  state  ?  What  should  it  describe  ?  What  disclose  ?  What  the  duty 
of  the  assured  in  relation  to  answering  questions  ?  What  is  the  eflfect 
of  an  abandonment  made  and  accepted  ?  In  what  capacity  does  the  as- 
sured subsequently  act?  Where,  after  abandonment  and  acceptance,  the 
remainder  of  the  voyage  is  performed,  who  is  entitled  to  the  freight  ? 
What  is  the  American  rule  ?  What  the  English  ?  What  is  a  partial 
loss  ?  Can  that  which  is  total  ever  become  partial  ?  How  ?  How  is  it 
under  our  rule  ?  What  is  the  most  difiicult  point  in  case  of  partial  loss  ? 
What  is  the  first  question  to  be  settled  ?  Is  the  estimated  value  conclu- 
sive ?  What  is  the  true  test  taken  to  arrive  at  value  ?  At  what  place 
and  time  is  the  value  to  be  determined  ?  And  what  value  ?  What  must 
be  added  to  value  ?  What  would  the  effect  of  this  be  ?  When  the  in- 
voice price  and  market  value  are  the  same,  what  is  the  valuation 
adopted  ?  What,  in  tliis  respect,  are  generally  equivalent  terms  ?  What, 
in  such  case,  does  the  court  adopt  ?  What  should  be  added  ?  What 
next  to  the  value  is  to  bo  arrived  at  ?  Suppose  damaged  goods  are  car- 
ried forward  to  the  place  of  destination,  what  question  then  arises? 
How  is  the  amount  payable  by  the  insurer  then  arrived  at  ?  Why  does 
not  this  aflford  a  perfect  indemnity  ?    How  may  this  difiiculty  bo  reme- 


328  NECESSITY   OF   INSURABLE   ENTEEEST 

died?  What  effect  have  adjustments  of  general  average  in  foreign 
ports  ?  IIow  are  losses  upon  memorandum  articles  settled  ?  At  wLose 
expense?  Upon  what  supposition  are  adjustments  upon  loss  between 
parties  final  ?  When  may  a  readjustment  be  had  ?  "What  may  be  done 
in  case  of  injury  to  a  vessel  ?  How  loss  ascertained  ?  Where  vessel  is 
forced  into  port  to  be  repaired,  who  bears  the  exjjenses  of  repairing  ? 
What  aro  the  cases  in  wliich  a  return  of  the  premium  may  be  enforced 
by  the  assured  ?  What,  if  insurano  cover  a  larger  interest  than  insured 
possessed  ?    When  will  premium  not  be  returned  ? 


II.   FIRE  INSURANCE. 

This  IS  a  contract  by  "vrliicli  the  insurer,  in  consideration 
of  the  premium,  undertakes  to  indemnify  the  insured  against 
all  loss  or  damage  ^vliich  may  occur  to  his  houses,  buildings, 
furniture,  stock,  goods  or  merchandise  by  means  of  acciden- 
tal fire  happening  Avithin  a  prescribed  period. 

PAET  I. 

INSUEABLE  INTEEESTS. 

§  584.  The  law  will  enforce  no  wager  policies  against 
fire.  Tlie  party  insured  must  have  some  interest  in  the 
subject-matter  not  only  at  the  time  of  the  insurance,  but 
also  at  the  time  of  the  loss.  But  as  the  law  allows  different 
persons  to  have  different  and  distinct  interests  in  the  same 
property,  so  it  will  permit  each  to  protect  his  interest  by 
means  of  insurance.  One  familiar  instance  illustrating  this 
is  the  case  of  mortgagor  and  mortgagee.  Each  has  an  in- 
sm-able  interest  in  the  same  property,  as  has  also  the  assignee 
of  a  mortgagee,  who  is  in  the  occupancy  of  the  premises. 
The  question  has  arisen  whether  the  mortgagee  had  any  in- 
surable interest  remaining  after  a  sale  by  a  master  in  chan- 
cery under  a  decree  of  foreclosure,  a  fire  having  destroyed 
the  building  insured  between  the  time  of  sale  and  the  en- 
rolment of  the  decree  and  execution  and  delivery  of  the 
deed ;  and  it  was  held  that  he  had  not,  the  deed  when  given 


IN5UBABLE  DTTEKEST  OF  C0XTEACT3  TO  PUECHASE.      329 

relating  back  to  and  having  legal  effect  given  to  it  from  the 
time  of  the  sale.  McLaren  v.  The  Hartford  Fire  Insurance 
Com^Omy^'^SeM.  151.  Another  instance  of  double  insur- 
ance upon  the  same  property  occurs  in  the  case  of  commis- 
sion merchants,  who,  by  virtue  of  their  interest  in  their 
commissions,  are  entitled  to  insure,  while  the  principal  or 
consignor,  being  the  owner,  has  also  a  right  to  insure.  The 
commission  merchant,  in  such  case,  may  insure  even  to 
the  full  value  of  the  goods.  De  Forest  v.  Fulton  Fire  In- 
surance Com2?any,  1  Hall.,  iT.  1^.  Rejp.  84. 

§  585.  A  question  has  arisen  as  to  the  insurable  interest 
of  a  party  occupying  premises  under  an  agi-eement  to  pur- 
chase, and  having  therefore  merely  an  equitable,  but  no 
legal  interest,  and  it  has  been  held  that  such  a  party  could 
insure,  and,  in  case  of  loss,  recover  the  full  value  of  the 
building  to  the  extent  of  the  insurance,  although  the  vendor 
had  insured  the  same  building  in  his  own  name.  TheJEtna 
Fire  Insurance  Comjpany  v.  Tyler,  16  Wend.  385.  And  in 
the  Columbia  Insurance  Co.  v.  Lawrence,  2  Peters,  25,  it 
was  held  that  such  a  party  had  an  insurable  interest,  although 
his  vendor  had  a  power  under  the  contract  to  treat  the  sale 
as  rescinded.  Where  a  person  is  merely  interested  in  the 
rent  of  buildings,  he  may  insure  that  from  loss  by  fire  within 
the  prescribed  period. 

QUESTIONS. 

"What  is  fire  insurance  ?  Can  ■wager  contracts  be  here  enforced  ? 
"What  must  party  insured  have?  And  •when?  Can  different  parties 
have  interests  in  the  same  thing?  "What  does  the  law  allow  about  the 
right  to  insure  ?  What  instance  in  illustration  ?  Has  mortgagee  any  in- 
surable interest  after  sale  by  master,  and  before  decree  enrolled  and  deed 
given?  "What  does  deed  relate  back  to?  "Who  may  insure  in  case  of 
commission  merchants?  To  what  extent  may  commission  merchants 
insure  ?  "What  instance  of  equitable  estate  -will  give  interest  sufficient 
to  insure  ?  Can  the  owner  of  premises  contracted  to  be  sold,  insure  ? 
Is  equitable  interest  sufficient  -where  vendor  can  treat  sale  as  a  nullity  ? 
Can  an  interest  in  the  rent  of  buildings  bo  insured  ? 


330  FACTS  STATED  IN  APPLICATION  TO  mSUEE. 

TART     II. 

THE  rOLICT,  ITS   CONTENTS,    CONSTEUOTION,  AND   ASSIGNMENT. 

§  586.  The  inception  of  the  policy  is  found  in  the  appli- 
cation of  the  party  for  insurance.  This  application  sliould 
bo  in  writing,  and  signed  by  the  aj^plicant,  or  if  communi 
cated  yerbally  to  the  insurer  should  be  by  him  reduced  to 
writing,  and  then  signed  by  the  party.  It  should  contain  a 
statement  of  all  the  facts  relating  to  the  subject-matter 
sought  to  be  insured,  which  the  applicant  deems  material 
to  the  risk,  and  in  addition  the  answers  made  by  him  to  all  such 
questions  relating  to  such  subject-matter  as  may  be  put  to 
him  by  the  insurer.  The  facts  tlie  most  usually  stated  and  in- 
quired about,  relate  to  the  material  of  the  building,  the  means 
of  heating  and  ligliting  it,  material  of  which  the  roof  is 
com2)osed,  the  title  or  interest  of  applicant  in  it,  and  the 
liens,  if  any,  that  may  exist  upon  it,  to  what  use  the  build- 
ing is  put,  what  are  its  surroundings,  the  distance  from  it  to 
any  other  building  or  buildings,  the  material  of  which  other 
surrounding  buildings  are  composed,  the  nature  and  value 
of  the  property  or  effects  proposed  to  be  insured,  the  man- 
ner in  which  they  are  disposed  of,  the  uatm-e,  character, 
situation,  and  materials  of  the  building  in  which  they  are 
contained,  and  whether  any  other,  and  what,  insurances  have 
been  effected  and  are  existing  upon  the  same  property. 
Upon  the  ascertainment  of  all  the  facts,  the  insurer  causes, 
or  liimself  draws  out,  a  survey  of  the  building,  which  should 
exhibit  its  size,  division  into  rooms,  and  sometimes  situation 
relative  to  other  buildings. 

§  587.  The  materials  are  now  obtained  for  the  policy, 
which  is  a  printed  form  having  blanks  to  be  filled  up  with 
the  special  matter  obtained  as  above  stated.  The  aj^plica- 
tion  and  the  sm-vey,  more  especially  the  former,  are  usually 
referred  to  in  the  policy  and  made  a  part  of  it.  Such  ex- 
press reference  makes  it  as  much  a  part  of  the  policy  as  if  it 


KEPEESENTATION  AS  CONITECTED  WITH  INSURANCE.      331 

had  been  actually  incorporated  in  it,  and  renders  all  it? 
statements  relative  to  the  situation  and  uses  of  the  premises 
express  warranties  having  the  same  effect  as  stated  in  marine 
insurance.  Jennings  v.  The  Chenango  Mutual  Insurance 
Company^  2  Denio,  75. 

§  588.  A  representation,  in  a  fire  insurance  policy,  no 
more  than  in  a  marine,  is  not  to  be  taken  as  a  part  of  the 
contract,  but  is  collateral  to  it,  has  none  of  the  qualities  of 
a  warranty,  and  requires  to  be  only  substantially  correct. 
And  there  is  a  material  difference  between  simply  rcfemng 
to  an  application  and  survey  in  the  policy,  and  referring  to 
it  as  forming  a  part  of  the  policy.  In  the  first  case,  it  has 
simply  the  effect  of  a  representation,  and  if  substantially 
correct,  the  policy  "will  be  valid,  although  a  condition  an- 
nexed to  the  policy  was  that  if  the  assured  should  make  any 
misrepresentation,  it  should  avoid  the  policy.  The  Farmers 
Insurance  cfc  Loan  Comjpany  v.  Sjiyder,  IG  Wend.  481.  But 
in  the  latter  case  it  is  made  a  part  of  the  policy  so  as  to 
change  what  Avould  otherwise  be  a  re])rcsentatiou  into  a 
warranty.  Burr'itt  v.  The  Saratoga  Mutual  Fire  Insur- 
ance  Company^  5  Ilill^  188. 

§  589.  Tlic  fire  policy  is  always  one  strictly  on  time,  and 
hence  the  commencement  and  termination  of  the  risk  must 
be  stated  with  precision.  As  the  property  proposed  for  in- 
surance is  always  open  to  the  investigation  of  the  insurer  or 
his  agent,  less  reliance  is  usually  placed  upon  the  communi- 
cations of  the  assured ;  still  the  insurer  has  a  right  to  rely 
on  the  representations  contained  in  the  application  or  in  the 
answers  to  his  own  questions,  and  hence  if  not  substantially 
true,  the  policy  which  is  based  upon  them  could  never  be 
enforced.  It  is  important  for  the  insurer  to  ascertain  the 
extent  of  the  interest,  as  his  insurance  is  made  in  the  confi- 
dence that  the  assured  will  resort  to  all  reasonable  precau- 
tions to  avoid  the  calamity  insured  against ;  and  for  this  he 
relies  principally  upon  the  motive  which  urges  the  assured 
to  protect  his  own  property.     lie  is  therefore  entitled  to  a 


332  CONDITIONS  A  TAUT  OF  THE  POLICY. 

true  statement  of  the  amount  of  interest  of  the  assured ; 
and  hence  wliere  the  aj^plication  M'as  to  insure  a  stone  mill, 
belonging  to  the  applicants,  describing  it  as  their  stone  mill, 
and  the  insurance  was  made  accordingly,  and  it  afterwards 
turned  out  that  they  were  in  possession  under  an  executory 
contract  of  sale,  it  was  held,  that  although  that  was  an  in- 
surahle  interest  yet  it  was  not  the  interest  represented,  and 
that  if  this  misrepresentation  was  material  to  the  risk,  the 
policy  was  void.  The  court  say  that  a  precarious  title  de- 
pending for  its  continuance  on  events  which  might  or  might 
not  happen,  is  not  such  a  title  as  is  described  in  the  offer  for 
insurance.  Columbian  Insurance  Company  of  Alexandria 
V.  Lawrence^  2  Peters^  25.  The  reverse  of  this  principle, 
however,  has  been  decided  in  the  State  of  New  York  in  the 
case  of  Tyler  v.  The  jEtna  Fire  Insurance  Company^  re- 
ported first  in  12  Wend.  507,  and  affinned  on  error  in  16 
Wend.  385,  in  which  it  was  held  that  a  party  in  possession 
under  a  contract  of  pm-chase,  obtaining  insurance  on  an 
application  representing  the  house  as  Ms^  and  the  description 
of  it  in  the  policy  is  as  his  dwelling-house^  is  not  guilty  of 
such  a  misrepresentation  as  will  avoid  the  policy.  The  pre- 
vailing opinion  now  is,  that  the  assured  need  not  state  that 
his  interest  in  the  subject-matter  insured  "is  a  qualified  or  a 
conditional  one,  unless  special  inquiries  are  made  of  him  in 
reference  to  it ;  but  if  any  such  are  put,  or  if  he  volunteers 
to  make  any  such  representation,  his  statement  must  be 
true,  or  the  policy  will  be  void.  If  any  facts  are  known  to 
the  assured  which  threaten  any  impending  danger,  they 
must  be  stated  to  the  insurer,  or  the  policy  will  be  void,  al- 
though there  was  no  intentional  fraud. 

§  590.  The  policies  are  usually  found  clogged  with  con- 
ditions, which,  by  their  tenns,  are  expressly  made  to  consti- 
tute a  part  of  the  instrument,  and  in  such  case  they  are 
construed  as  so  many  distinct  warranties,  and  hence  their 
literal  performance  by  the  assured  are  so  many  conditions 
precedent  to  a  right  of  recovery.     Even  a  paper  which 


CONDITIONS  IN  POLICIES   OF  INSUKANCE.  333 

purports  to  be  conditions  of  insurance,  if  annexed  to,  and 
delivered  with  a  fire  policy,  altliougli  not  expressly  referred 
to  by  it,  is  nevertheless  to  be  deemed  pn7na  facie  a  part  of 
it.  Murdock  v.  The  Chenango  Mutual  Insurance  Com- 
pany, 2  Comst.  210.  In  this  case  one  of  the  conditions  .was, 
that  if  the  risk  shall  be  increased  by  any  means  within  the 
control  of  the  assured,  the  insurance  shall  be  void;  and 
under  this  it  was  held  that  the  assui-ed  had  no  right  to  erect 
other  buildings  on  his  own  premises  so  as  to  increase  the 
hazard,  and  that  if  he  does  so,  it  avoids  the  policy.  This 
case  also  settles  the  effect  of  a  promise  of  something  in  the 
futui'e,  when  introduced  into  the  application.  In  the  de- 
scription was  "  one  stove-pipe  passes  through  the  window 
at  the  side  of  the  building.  There  will,  however,  he  a  stone 
chimney  huilt,  and  the  j^ipe  will  pass  into  it  at  the  side. 
This  was  regarded  as  a  warranty  that  the  chimney  should  be 
built  within  a  reasonable  time,  and  that  a  violation  of  the  en- 
gagement would  avoid  the  policy.  Tliis,  we  have  already 
seen,  has  no  such  effect  when  presenting  itself  in  the  shape 
of  a  mere  verbal  promise.  Alstoii  v.  The  Mechanics  Mutual 
Insurance  Company  in  the  City  of  Troy,  4  Uill,  329.  But 
where  there  is  no  provision  in  the  policy  to  the  contrary, 
the  applicant  may,  at  the  time  of  his  application,  contem- 
plate the  erection  of  a  new  building  nearly  adjoining  the 
one  insured,  and  afterwards  may  proceed  to  erect  it,  giving 
no  notice  to  the  insurers,  without  invalidating  the  policy. 
Gates  V.  The  Madison  County  Mutual  Insurance  Com- 
pany, 1  Seld.  469. 

§  591.  A  very  common  provision  found  in  a  fire  policy 
is  a  prohibition  of  the  use  of  camphene  in  the  building  in- 
sured, and  whenever  this  condition  is  inserted,  its  prohibi- 
tion forms  a  part  of  the  contract,  and  partakes  of  the  nature 
of  warranty,  and  this,  if  violated,  whctlicr  its  breach  afiects 
the  risk  or  not,  avoids  the  policy.  It  even  has  this  effect 
altliougli  its  use  is  discontinued  for  some  time  before  the  oc- 
currence of  the  fire.    The  position  taken  in  the  j  m*isprudence 


334  CONDITIONS    IN   POLICIES   OF   INSURANCE. 

of  New  York,  is  "  that  tlic  only  safe  rule  is  to  hold  the  con- 
tract of  insurance  at  an  end  the  moment  the  warranty  is 
broken,  and  that  it  cannot  be  revived  again  without  the 
consent  of  both  parties,  unless  the  insurer  has,  by  some  act 
or  line  of  conduct,  waived  the  breach  or  violation  of  the 
warranty."  Mead  v.  Tlte  North-western  Insurance  Com- 
pany, 3  Seld.  530.  This  is  very  important  doctrine,  and 
cannot  be  stated  as  universally  acquiesced  in.  Indeed  a 
principle  directly  the  reverse  is  established  in  English  juris- 
prudence, as  Chief  Justice  Abbot  in  Weir  y.  Aberdeen,  2 
Barn.  <&  Aid.  320,  with  the  concurrence  of  the  other  judges, 
held  that  if  there  be  unseaworthiness  at  the  commencement 
of  the  voyage,  and  the  defect  is  cured  before  loss,  a  subse- 
quent loss  may  be  recovered  under  the  policy.  Thus,  on 
this  point,  English  and  American  jurisprudence  are  directly 
at  issue.  Li  a  very  recent  case,  it  has  been  held  that  a  pro- 
hibition of  camphene  relates  only  to  its  use  as  a  lighting 
material,  and  hence  that  the  use  of  it  in  a  printing  establish- 
ment for  cleaning  type,  which,  is  customary  among  printers, 
does  not  render  void  a  policy  of  insurance  upon  printing 
and  book  materials,  stock,  paper,  &c.,  contained  in  certain 
buildings  occupied  for  a  printing  office,  bindery,  and  book 
store,  in  the  city  of  New  York.  Harper  v.  The  Albany 
Mutual  Insurance  Company,  17  New  Yorh  Hep.  194. 

§  692.  Another  condition  usually  inserted  in  policies 
provides  that  if  the  insured  has  procm'ed  any  other  insur- 
ance upon  the  same  property,  and  has  not  notified,  and  had 
the  same  indorsed  upon,  the  one  then  insured,  the  same 
should  be  void.  The  object  of  this  is  to  prevent  the  accu- 
mulation of  insurances,  thus  not  only  taking  away  the  motive 
to  preserve  the  property  from  loss,  but  also  furnishing  a 
strong  one  for  its  destruction.  Under  this  condition  two 
questions  have  arisen.  First,  what  is  the  meaning  of  "  any 
other  insurance  upon  the  same  property  ?  "  and  the  second, 
what  kind  of  notice  is  a  compliance  with  the  condition  ?  In 
regard  to  the  first,  it  is  held,  that  where  persons  are  th^ 


CONDITIONS   IN   POLICIES   OF  INSUKANCE.  335 

owners  of  different  interests  in  tlie  subject  of  insurance, 
each  one  may  insure  his  own  without  giving  notice  that 
another  and  distinct  interest  has  been  insui-ed  by  another. 
And  so  far  has  this  principle  been  earned,  that  where  the 
provision  was  "  of  any  other  insurance  made  on  their  belialf 
on  the  same,"  it  was  held  limited  to  any  other  effected  at 
the  instance,  and  upon  the  authority  of  the  assured ;  and 
hence  that  an  insurance  made  on  his  account  by  another 
without  his  knowledge,  authority,  or  subsequent  recognition, 
was  not  one  made  within  the  clause.  Franklin  Insurance 
Company  v.  Drake,  2  B.  Monroe,  47.  But  a  more  difficult 
question  has  arisen  respecting  the  construction  to  be  put 
upon  an  insurance  obtained  by  a  mortgagor,  and  assigned 
by  consent  of  the  company  to  the  mortgagee.  The  questions 
here  are,  whose  interest  is  covered  by  such  a  ]X)licy,  that  of 
the  mortgagor  or  of  the  mortgagee  ?  And  if  that  of  the 
former,  is  it  such  an  insurance  of  the  interest  of  the  mort- 
gagor as  requires  him  to  give  the  notice  required  in  the 
condition  when  he  obtains  a  second  insiu'ance  ?  The  con- 
stmction  to  be  put  upon  such  an  insurance  has  come  up  for 
consideration  in  Cariyentcr  v.  The  Providence  Washington 
Insurance  Company,  16  Peters,  495,  and  in  Robert  v.  The 
Traders^  Insurance  Company,  lY  Wend.  631,  636-7, 
reversing  the  decision  of  the  Supreme  Court  as  reported  in 
9  Wend.  404,  and  both  substantially  holding  that  it  was  the 
interest  of  the  mortgagor,  and  not  of  the  mortgagee,  that 
was  thus  insured,  and  that  a  failure  by  the  former  to  give 
notice  of  such  a  policy  on  obtaining  a  second  insurance 
avoided  the  policy  obtained  on  such  insurance.  Tlie  ques- 
tion relating  to  the  kind  of  notice  required,  also  came  up 
for  consideration  in  the  case  reported  in  the  16  Peters,  386, 
and  it  was  held  that  a  parol  notice  was  not  sufficient,  but 
that  it  was  necessary  in  case  of  any  prior  policy  that  the 
same  should  not  only  be  notified  to  the  company,  but  should 
be  mentioned  in,  or  indorsed  upon  the  policy,  otherwise  tlie 
second  insurance  would  be  of  no  effect.     Where,  however, 


336  CONDITIONS  IN  POLICIES  OF  INSUKANCE. 

the  provision  was  of  any  other  insurance,  not  notified  to  the 
corporation^  a  verbal  notice  was  held  sulHcient.  McEwen 
V.  The  Montgoinery  County  Mutual  Insurance  Company, 

5  mil,  101. 

§  503.  Another  condition  generally  introduced,  relates 
to  future  insurances,  and  requires  that  if  any  such  shall  be 
made,  reasonable  notice  shall  be  given,  and  the  same  shall 
be  indorsed  on  the  policy,  or  otherwise  acknowledged  or 
approved  in  writing.  One  question  arising  here,  relates  to 
the  sufficiency  of  the  approval,  and  it  has  been  held  that 
where  a  reasonable  notice  was  given,  and  a  letter  from  the 
secretary  of  the  company  received  in  reply,  saying  ^''  I  have 
received  your  notice  of  additional  insurance,^^  and  containing 
no  expression  of  disapproval,  was  a  sufficient  acTcnowledg- 
ment  and  approval  in  ivritiny  to  satisfy  the  terms  of  the 
policy.  Potter  v.  The  Ontario  <&  Livingston  Mutual  Insur- 
ance Company,  5  Hill,  14Y.  The  doctrine  here  established 
is,  that  the  making  further  insurance  did  not  work  a  forfeit- 
ure of  the  policy,  unless  the  plaintiff  neglected  to  give 
notice  with  all  reasonable  diligence  ;  that  on  receiving  no- 
tice, it  was  for  the  defendants  to  say  whether  the  contract 
should  tenninate  or  not ;  and  that  until  they  made  the 
election,  the  policy  continued  in  force.  It  seems  now  gen- 
erally to  be  understood  that  a  parol  notice  is  always  suffi- 
cient, provided  nothing  is  said  in  the  policy  as  to  the  manner 
of  notification,  and  it  should  also  be  added,  no  provision 
that  it  shall  be  indorsed  on  the  policy.  A  very  interesting 
and  vastly  important  question  arising  out  of  double  insur- 
ance, is  this :  A  policy  is  effected  in  one  office  containing 
the  usual  clause  to  protect  against  double  insm*ance,  and 
afterwards  one  is  effected  in  another  office,  containing  the 
same  clause,  and  no  notice  is  given  to  either  company.  Has 
the  assured  any  remedy  upon  either  policy,  and  if  so,  which  ? 
This  question  has  twice  arisen  in  Massachusetts,  first  in 
Jackson  v.  Massachusetts  Mutual  Fire  Insurance  Company, 
23  Piclc.  418,  and  second  in  ClarTc  v.  The  Nev)  England 


CONDITIONS  IN  POLICIES  OF  INSIJEAIfCE.  337 

Mutual  Fire  Insurance  Comjpany^  6  Cusli.  342,  in  both 
which  cases  the  doctrine  was  settled  to  be  that  the 
second  policy  being  utterly  void,  and  the  same  as  if  no 
policy  had  ever  been  effected,  can  have  no  effect  upon  the 
first,  and  hence  that  the  only  remedy  of  the  assured  is  upon 
the  first,  which  is  perfect.  This  doctrine  may  now  probably 
be  regarded  as  the  settled  doctrine,  notwithstanding  the 
doubt  thi-o'wn  upon  it  in  CarjKnter  v.  The  Providence 
Washington  Insurance  Comjpany^  16  Peters^  386.  As  upon 
the  point  whether  the  second  policy  is  voidable  or  void,  Mr. 
Justice  Story,  in  the  last-mentioned  Massachusetts  case,  is 
shown  to  have  promulgated  a  different  doctrine  from  what 
he  had  himself  declared  in  1  Storifs  Pep.  57. 

§  594.  Tliere  is  still  another  condition  growing  out  of 
the  possibility  of  double  insurances  that  is  often  inserted  in 
policies,  and  that  is  a  clause  providing  that  if  another  in- 
surance is  effected,  and  a  loss  occiu-s,  the  insured  shall  not 
receive  on  this  policy  any  greater  proportion  of  the  damage 
sustained  than  the  amount  then  insured  shall  bear  to  the 
whole  amount  insured  upon  the  same  property.  The  law, 
in  such  case,  is  laid  down  in  The  Howard  Insurance  Comr 
^any  of  New  Yorh  v.  Scribner,  5  mil,  298-301  :  "  A  may 
insure  the  same  subject  against  fire  in  several  offices,  to  any 
amount,  due  notice  being  given  to  each,  and  the  fact  noted 
on  the  respective  policies.  Tlie  effect  is,  that  each  office 
then  stands  in  the  relation  of  co-surety  with  the  other,  ac- 
cording to  the  several  amounts  for  which  they  undci-took, 
just  as  if  they  had  all  under^\'l'itten  the  same  policy.  Tlio 
several  policies  are  considered  as  one.  Stoj^ping  here,  there- 
fore, the  insured  may  sue  and  recover  on  one  or  more  of 
them,  to  the  extent  of  his  entire  loss,  if  the  sum  subscribed 
will  cover  it ;  and  those  who  pay  the  loss  may  compel  con- 
tribution for  the  payment  from  the  others,  in  the  proportion 
that  each  of  the  sums  subscribed  by  them  bears  to  the  whole 
amount  of  subscriptions.  To  avoid  this  circuity,  the 
clause  in  question  was  introduced.  By  this,  the  double 
22 


338  CONDITIONS   IN  POLICIES  OF  INBTJEANCE. 

office  of  recovery  and  contribution  is  performed  in  a  single 
action  ;  the  defendant  being  allowed  to  recoup  tlie  same 
amount  wliich  lie  must  formerly  have  recovered  over  against 
those  who  stood  by  his  side.  Tlic  clause  in  question  was 
probably  intended  to  substitute  proportional  abatement  for 
contribution,  in  all  those  cases  in  which  the  latter  would 
otherwise  have  been  required  by  the  common  law."  The 
limitation  in  this  case,  however,  is  to  the  same  identical 
property,  and  hence  where  $1,000  were  insured  on  fixtures, 
and  $3,000  on  stoch,  and  another  policy  was  obtained  insur- 
ing $5,000  on  the  stock  and  fixtures,  as  one  parcel,  it  was 
held  not  a  case  of  double  insurance,  and  that  each  company 
was  held  to  the  full  amount  of  its  insurance.  See  also 
Ha/rris  v.  Oliio  Insurance  Company,  5  Ohio,  461. 

§  595.  Other  conditional  clauses  frequently  introduced, 
classify  the  goods  to  be  insured,  denominating  one  class  as 
not  hazardous,  another  as  hazardous,  and  another  still  as 
extra  hazardous,  and  the  two  last  are  also  often  applied  to 
certain  trades  and  occupations.  The  condition  may  be  that 
the  building  to  be  insured  shall  not  be  used  for  the  carrying 
on  of  certain  trades,  or  the  storing  of  certain  goods  tenned 
hazardous  or  extra  hazardous,  without  the  consent  of  the 
insurer,  or  an  extra  per  cent,  of  premium.  One  effect  of  the 
classification  into  hazardous  and  extra  hazardous  is  to  throw 
all  those  which  are  not  enumerated  into  the  class  of  not 
hazardous  on  the  principle  of  expressio  unius  est  exclusio 
altcrius.  The  prohibition  contained  in  a  condition  against 
"  storing  and  keeping  hazardous  articles  "  is  not  broken  by  a 
mere  casual  deposit  of  the  articles.  Hynds  v.  The  Schenec- 
tady County  Mutual  Insurance  Company,  1  Kern.  551. 
!Neith(ii'  is  the  temporary  introduction  of  hazardous  articles 
for  the  purpose  of  repairs,  a  breach  of  a  condition  which 
prohibits  trading  in  or  storing  such  articles  ;  the  object  of 
the  prohibition  being  held  simply  to  prevent  the  building 
from  being  habitually  used  for  the  prohibited  trade  or  pur- 
pose, and  the  habitual  deposit  in  store  of  the  prohibited  ar- 


QUESTIONS  HOW   FUXLY  TO  BE  ANSY?XKED.  339 

tides,  and  not  their  occasional  introduction  for  the  purpose 
of  repairs  and  painting,  G'Neil  v.  The  Buffalo  Fire  In- 
surance Company^  3  Comst.  122.  In  the  same  case  it  is  also 
held  that  a  warranty  may  be  either  affirmative  or  promissory, 
but  that  in  an  application  in  which  the  premises  were  de- 
scribed as  occupied  hy  a  certain  individual  as  a  private 
residence,  that  did  not  amount  to  a  warranty  of  the  continu- 
ance of  the  occupation  during  the  risk,  and  hence  the  insurers 
were  liable,  although  during  a  portion  of  the  time  insured 
the  premises  were  unoccupied. 

§  596.  In  respect  to  the  fulness  and  fidelity  of  answer 
required  to  questions  proposed,  the  doctrine  is,  that  whether 
the  inquiry,  in  its  fullest  sense,  does  or  does  not  call  for 
more  than  the  answer  gives,  yet  if  the  applicant  answered 
as  he  understood  it,  and  the  insurers,  without  objection,  ac- 
cept the  application  and  issue  the  policy,  they  mil  not  be 
permitted,  after  a  loss,  to  resist  the  payment  on  the  ground 
that  the  answer  was  not  full.  And  hence  when  the  ques- 
tion was.  How  bounded,  and  distance  from  other  buildings, 
if  less  than  ten  rods,  and  for  what  purpose  occupied,  and  by 
whom?  and  the  answer  stated  the  nearest  buildings  on 
the  several  sides  of  the  insured  premises,  but  did  not  state 
all  the  buildings  within  ten  rods  ;  the  answer  was  held  not 
to  be  a  warranty  that  there  were  no  other  buildings  within 
that  distance  than  those  mentioned.  Gates  v.  The  Madison 
County  Mutual  Insurance  Company,  2  Comst.  43.  Same 
case,  1  Seld.  469. 

§  597.  The  policy  sometimes  contains  a  provision  that  the 
insurers  would  be  liable  for  fire  by  lightning,  and  then  the 
question  may  arise :  When  are  all  the  conditions  so  com- 
plete that  the  insurer  is  liable  ?  The  insurance  in  such  case 
is  held  to  be  against  fire  in  the  popular  meaning  of  the 
term — actual  ignition  or  burning,  and  not  against  the  me- 
chanical cficcts  of  lightning  ;  and  hence  where  sucli  a  pro- 
vision was  contained  in  the  policy,  and  the  building  was 
struck  by  lightning,  prostrated,  and  destroyed,  but  no  igni- 


340        0ON8TEU0TION  OF  WAKEAJSTTIES  AND  CONDITIONS. 

tion  or  combustion  took  place,  tlic  insurers  were  not  held 
liable  for  the  loss.  Bahcock  v.  The  Montgomery  County 
Mutual  Insurance  Compa7iy,  4  Comst.  326.  A  condition 
will  2^rotect  the  insurer,  although  the  loss  be  not  directly 
owing  to  the  cause  specified  in  the  policy.  It  is  sufficient 
if  it  can  be  traced  directly  to  the  cause ;  as  where  the  policy 
contained  a  condition  that  the  insurer  would  not  be  liable 
for  any  loss  occasioned  by  the  explosion  of  a  steam-boiler  ; 
and  there  occurred  an  explosion  in  the  building  where  the 
property  was  situated,  by  means  of  which  a  fire  was  brought 
in  contact  with  the  insured  property  and  consumed  it.  Held 
the  loss  was  fairly  within  the  exception  created  by  the  con- 
dition, and  the  insurer  could  not  be  held  liable.  St.  John  v. 
The  American  Mutual  Fire  &  Marine  Insurance  Company , 
1  Kern.  516.  And  where  the  clause  iii  the  policy  insures 
against  loss  or  damage  by  fire,  a  loss  which  results  partly 
from  the  explosion,  and  partly  from  the  combustion  of 
gunpowder,  is  within  the  protection  of  the  clause.  Scripture 
V.  Lowell  Mutual  Fire  Insurance  Company,  10  Cush.  356. 
§  598.  All  warranties  and  conditions  have  applied  to 
them  a  strict  rule  of  construction,  and  provided  they  appear 
upon  the  policy,  it  is  entirely  immaterial  how,  whether  they 
are  written  upon  the  face  of  it,  or  in  the  margin,  or  transr 
versely,  or  even  on  a  subjoined  paper  refeiTcd  to  in  the  policy. 
The  rule  of  construction,  however,  is  always  made  to  accom- 
modate itself  to  the  peculiar  circumstances  of  the  case,  and 
hence  where  a  condition  was  inserted  prohibiting  the  use  of 
the  building  for  storing  therein  goods  denominated  hazard- 
ous, the  keeping  such  goods  as  oil,  or  spiritous  liquors,  by  a 
grocer,  in  ordinary  quantities,  for  his  ordinary  common  re- 
tail, was  held  not  to  be  a  storing  them  within  the  policy. 
Langdon  v.  JN'eio  Yorh  Equitable  Insurance  Company.,  1 
Hall.,  226.  The  English  rule  of  construing  qualifying 
clauses  inserted  in  the  policy  has  been  far  more  strict  and 
severe  than  the  American,  holding  in  Stolies  v.  Cox,  37  Eng. 
Law  &  Eg.  561,  that  a  change  in  the  condition  of  the  prop- 


MATEEIALITY    OF   KEPKESENTATIONS.  34:1 

erty  as  described  at  the  date  of  the  policy,  though  not  in 
terms  forbidden,  -would  yet  avoid  the  policy,  whether  it  in- 
creased the  risk  or  not.  Tlie  American  doctrine  is  much 
less  strict  in  this  respect,  and  changes  which  are  not  ex- 
pressly forbidden,  will  not  have  the  efiect  to  vitiate  the 
policy,  unless  they  are  either  fraudulent  or  occasion  the  loss. 
The  cjuestion  as  to  whether  there  has  been  any  material  in- 
crease of  risk  by  addition  or  alteration  of  building,  when 
that  is  provided  for  in  the  policy,  is  regarded  as  one  of  fact, 
and  hence  to  be  submitted  to  a  jury.  Grant  v.  The  Hoioard 
Insurance  Company  of  New  Yorh^  5  Hill.  10. 

§  599.  All  representations  made  by  the  insured  to  the 
insurer  which  are  material  to  the  risk,  and  arc  false  and 
fraudulent,  vacate  the  policy  at  the  election  of  the  insurer. 
But  the  point  still  remained  for  decision,  as  to  the  effect  upon 
a  policy,  of  fraudulent  representations  made  by  the  assured 
to  the  insurer  upon  his  application  for  it,  though  not  mate- 
rial to  the  risk,  yet  material  in  the  judgment  of  the  insurer, 
and  which  induced  him  to  take  the  risk.  That  question  has 
only  recently  been  presented,  and  it  was  held  that  such 
representations  did  avoid  the  policy.  Valton  v.  The  Na- 
tional Fund  Life  Assurance  Company.,  20  New  York  Rep. 
32.  A  question  has  also  recently  been  presented,  testing 
the  eiFect  of  an  omission  in  a  statement,  where  the  applicant 
described  the  building  to  be  insured  as  a  stone  dwellmg- 
house,  but  omitted  to  state  the  further  fact  that  a  wooden 
kitchen  was  attached  to  it.  Held,  that  this  omission  was 
fatal  to  the  validity  of  the  policy.  Chase  v.  The  Hamilton 
Insurance  Company^  20  New  YorTc  Rep.  52. 

§  600-  Clauses  are  usually  contained  in  the  policy,  ren- 
dering it  void  in  case  the  assured  parts  with  his  interest  in 
the  property  covered  by  it,  and  also  in  case  of  his  assign- 
ment of  the  policy  without  consent  of  the  insurer.  The 
first  is  unnecessary,  as  the  interest  of  the  assured  in  the 
subject  of  the  insurance  is  essential  to  support  the  policy, 
and  when,  therefore,  he  parts  with  it,  the  policy  itself  be- 


342  ASSIGNMENT   OF   TOLICY   AND   SUBJECT   INSUEED. 

comes  a  dead  letter.  Hence,  if  the  assured  sells  the  subject 
of  insurance  and  retains  the  policy,  the  risk  of  the  insurer 
terminates,  and  he  is  liable  to  no  one  in  case  of  loss.  Under 
these  prohibitory  clauses  it  has  sometimes  become  necessary 
to  determine  what  is,  or  what  is  not,  a  sale ;  and  in  a  case 
where  the  charter  prohibited  an  alienation  hy  sale  or  other- 
wise^ it  was  held  that  a  mortgage  was  not  a  sale.  Conover 
V.  The  Mutual  Insurance  Comjjany  of  Albany,  1  Comst. 
290.  Folsom  v.  Belknap  County  Mtitual  Fire  Insurance 
Coonpany,  10  Fast.  231.  The  points  of  difficulty  generally 
presenting  themselves  relate  to  the  assignment  of  the  policy. 
In  reference  to  this,  the  question  is  clearly  settled  that  where 
the  prohibition  against  assigning  is  found  in  the  policy,  it  is 
only  operative  during  the  continuance  of  the  risk,  and  that 
an  assignment  after  a  loss,  and  the  accruing  of  a  cause  of  ac- 
tion against  the  insurer,  is  in  reality  no  more  than  the  assign- 
ment of  a  debt,  and  transfers  all  the  right  of  the  assured 
to  the  assignee.  Mellen  v.  The  Hamilton  Fire  Insurance 
Company,  IT  Wew  Yorh  Bep.  609.  The  assignment  of  the 
policy,  to  be  any  benefit  to  the  assignee,  must  be  accompa- 
nied with  a  transfer  of  some  kind  of  interest  in  the  subject 
of  insurance  to  the  assignee,  and  hence  when  the  purchaser, 
on  execution  of  the  property  insured,  applied  to  the  insurer, 
and,  without  stating  his  purchase,  requested  an  assignment 
of  the  policy,  that  of  itself  was  held  suflficient  notice  that 
he  had  acquired,  or  was  about  to  acquire,  some  interest  in 
the  goods.  Hooper  v.  The  Hudson  Biver  Fire  Insiirance 
Company,  17  New  TorJc,  42-1.  "Without  the  prohibitory 
clause,  policies  are  assignable  in  equity,  but  the  assignee 
would  derive  no  benefit  from  it  without  acquiring  some  in- 
terest in  the  property  against  the  damage  or  loss  of  which 
it  afi'ords  an  indemnity.  It  is  entirely  competent,  however, 
for  parties  so  to  word  the  prohibition  against  assignment  as 
to  destroy  all  right  of  transfer  without  consent  of  the  in- 
surer, as  in  the  following  instance  :  "  The  interest  of  the 
assured  in  this  policy  is  not  assignable  without  the  consent 


ASSIGKMEN'T  OF  POLICY  WHEN   SUFFICIENT.  3i3 

of  the  said  company  in  writing ;  and  in  case  of  any  transfer 
or  termination  of  the  interest  of  the  assured,  either  by  sale 
or  otherwise,  without  such  consent,  this  policy  shall  thence- 
forth be  void  and  of  no  eftect."  Ileld,  the  assignment  with- 
out consent,  avoided  the  policy.  Smith  v.  TIiq  Saratoga 
County  Mutual  Fire  Insurance  Comjpany^  1  IIlll^  497. 

§  601.  Tlie  question  may  arise  as  to  what  will  be  con- 
sidered a  sufficient  assignment  where  the  usual  prohibition 
against  it  is  found  in  the  policy,  "  unless  by  the  consent  of 
the  com^^iany  manifested  in  writing,"  and  it  is  held  that 
where  the  secretary,  on  application  to  him  at  the  office  of 
the  company,  endorsed  upon  the  policy  and  subscribed  a 
consent,  it  was  proof  of  sufficient  authority  to  do  so,  where 
there  was  no  contrary  evidence.  And  that  the  fact  of  his 
being  sole  agent  of  the  company,  transacting  its  business  at 
their  office,  and  habitually  giving  such  consent  in  writing, 
and  entering  the  same  in  the  books  of  the  company  without 
objection  or  repudiation,  would  be  evidence  sufficient  with- 
out showing  an  ai)pointment  by  a  formal  resolution  of  the 
Board  of  Directors.  Conover  v.  The  Mutual  Insurance 
Company  of  Albany^  1  Comst.  290. 

§  602.  A  question  growing  out  of  valid  assignments  of 
policies  much  more  important  than  any  yet  considered,  re- 
lates to  the  nature  and  effect  of  the  assignment,  and  the 
manner  and  extent  to  which  the  subsequent  acts  of  the  as- 
signor can  affect  tlie  assignee.  Tlie  facts  giving  origin  to 
this  question  are  generally  these.  The  owner  of  property 
insured  mortgages  it  to  another,  and,  having  obtained  the 
written  consent  of  the  insurer,  duly  assigns  the  policy  to 
the  mortgagee.  Subsequent  to  the  assignment  he  obtains 
another  policy  of  insurance,  omitting  to  give  notice  to  the 
insurer,  or  does  or  omits  some  other  act,  which,  as  to  him, 
would  render  void  the  insurance.  What  effect  has  such 
act  upon  the  rights  of  the  assignee  ?  Until  the  year  1858, 
the  course  of  judicial  decision  in  the  State  of  Kew  York  had 
been  uniform,  that  no  act  of  the  assignor  done  or  omitted 


3-14  EFFECT   OF   ASSIGNMENT   ON   EIGHTS. 

subsequent  to  an  assignment  "U'itli  the  -written  consent  of  the 
insurer,  could  impair  or  destroy  any  right  of  the  assignee 
under  the  assignment.  The  principle  assumed  was,  that  the 
assignment  of  the  policy  ^vith  the  assent  of  the  insurer, 
creates  new  and  mutual  relations  and  rights  between  the 
assignee  and  the  insurer,  which  cannot  be  changed  or  im- 
paired by  the  acts  of  a  third  person,  over  whom  the  insured 
party  has  no  control.  Tliis  principle  had  been  directly 
affirmed  in  Robert  r.  The  Trader i  Insurance  Company ^  9 
Wend.  404.  The  same  case  afterwards  went  to  the  Court 
of  Errors,  see  17  Wend.  631,  but  upon  a  different  point.  It 
had  been  approved,  although  not  discussed,  in  Conover  v. 
The  Mutual  Insurance  Company  of  Albany,  1  Comst.  290- 
293  ;  and  again  in  Murdoch  y.  The  Chenango  County  Mu- 
tual Insurance  Company^  2  Comst.  218-219 ;  and  again  di- 
rectly decided  in  what  appears  to  hare  been  the  unanimous 
opinion  of  the  Court  of  Appeals,  in  Tillou  v.  The  Kingston 
Mutual  Insurance  Company,  1  Seld.  405.  In  1858,  during 
the  same  term  of  the  Court  of  Appeals,  this  question  was 
presented  in  two  cases,  viz. :  Grosvenor  v.  The  Atlantic 
Fire  Insurance  Company  of  BrooMyn,  17  Nevj  Yorh  Rejp. 
391,  and  in  The  Buffalo  Steam  Engine  Works  v.  The  Sun 
Mutual  Iisurajice  Company.,  17  New  Yorh  Itep.  401,  in 
which  the  doctrine  theretofore  settled,  after  a  good  deal 
of  consideration  was  overturned ;  ihe  assignment,  with 
the  assent  of  the  insurer,  was  denied  the  effect  of  a  new 
contract  between  the  assignee  and  the  insurer ;  and,  as 
a  resulting  consequence,  the  assignee  was  held  chargeable 
with  all  the  acts  and  omissions  of  his  assignor,  as  affecting 
his  remedy  against  the  insurer.  This  doctrine  was  settled 
by  a  divided  court,  five  to  three,  in  both  cases  reversing  the 
decision  of  the  Supreme  Court.  "Whether  this  radical  change 
in  the  view  taken  of  the  nature  and  effect  of  assignments 
of  policies  of  insurance,  resting,  as  it  really  does,  upon  the 
conclusions  arrived  at  by  one  of  the  judges  of  the  Court  of 


QUESTIONS.  34:0 

Appeals,  \rill  continue  to  be  acquiesced  in,  and  th.us  rendered 
permament,  remains  yet  to  be  seen. 

QUESTIONS. 
Where  is  found  tlie  inception  of  the  policy  ?  How  should  the  ap- 
plication be  ?  How  signed  ?  "What  should  it  contain  ?  What  in  addi- 
tion ?  "What  are  the  facts  the  most  generally  inquired  about  ?  What 
next,  upon  ascertainment  of  the  facts  ?  What  is  the  policy  ?  "What 
are  made  parts  of  it  ?  And  how  ?  What  is  the  effect  of  express 
reference  ?  How  is  a  representation  taken  and  what  required  in  relation 
to  it  ?  Is  there  any  difference,  and  what,  between  referring  to  an  ap- 
plication and  refering  to  it  as  a  part  of  the  policy  ?  What  is  a  fire  policy 
as  to  time,  and  what  necessary  to  be  stated  ?  What  has  the  insurer  a 
right  to  rely  upon  as  to  representations  and  answers  ?  Why  should  the 
insurer  ascertain  the  extent  of  interest  of  the  insured  ?  "What  is  he  en- 
titled to  in  relation  to  it  ?  What  illustrations  ?  When  is  applicant  only 
bound  to  state  his  interest  ?  How  must  he  answer  inquiries,  or  make 
voluntary  statements  ?  What  duty  in  relation  to  facts  that  threaten  im- 
pending danger  ?  What  are  fire  pohcies  usually  clogged  with  ?  What 
a  part  of ?  How  construed?  How  performed  by  the  assured?  How 
regarded?  How  paper  containing  conditions  made  a  part  of  a  fire 
policy  ?  What  illustration  ?  What  the  effect  of  a  promise  in  the  fu- 
ture ?  What  illustration  ?  Any  difference  whether  same  be  verbal  or 
in  writing  ?  What  effect  of  provision  prohibiting  use  of  camphene  in 
building  insured  ?  What  effect,  if  use  be  discontinued  some  time  before 
fire  ?  What  the  principle  settled  ?  What  the  doubt  in  relation  to  it  ? 
What  does  a  prohibition  of  camphene  relate  to  ?  "What  instance  in 
iEustration  ?  What  the  provision  usually  inserted  relative  to  other  in- 
surances and  notice  ?  What  the  object  of  it  ?  What  questions  have 
arisen  ?  What  is  held  in  regard  to  the  first  ?  How  far  has  this  principle 
been  carried  ?  What  illustration  ?  What  construction  to  be  put  on 
effect  of  assignment  of  policy  by  mortgagor  to  mortgagee  with  consent 
of  company?  Does  mortgagor,  in  such  case,  retain  any  insurable 
interest  ?  What  necessary  in  case  of  subsequent  insurance  by  mort- 
gagor? What  kind  of  notice  necessary?  What  provision  in  rela- 
tion to  future  insurances  ?  What  is  here  a  sufficient  approval  ?  What 
illustration  ?  When  is  a  parol  notice  sufficient  ?  What  important  ques- 
tion arises  out  of  double  insurance  ?  Upon  which  policy  has  the  assured 
a  remedy  ?  What  provision  as  to  ai)portioning  insurance  moneys  is  some- 
times inserted  in  policies  ?  What  the  law  where  there  is  such  provi- 
sion ?  What  the  limitation  ?  What  clauses  introduced  as  to  classifying 
hazards?    Into  wh.it  classes  classified?    "What  the  applications  some- 


346  PEOYISION  AS  TO  LOSS. 

times  made?  TThat  the  provisions  sometimes  ia  regard  to  lightningl 
"What  dues  fire  by  lightning  mean  ?  What  exchided  f  "\Vill  ^jrovision 
protect  insurer  if  hjss  be  not  directly  owing  to  the  cause  specified  in  the 
policy?  What  illustration?  What  constructions  applied  to  warranties 
and  conditions  ?  What  must  they  appear  upon  ?  How  may  they  be 
■written  ?  What  does  the  rule  of  construction  accommodate  itself  to  ? 
What  illustration  ?  What  difierence  of  construction  between  English 
and  American  jurisprudence?  What  kinds  of  representations  vacate 
pohcy,  and  at  whose  election  ?  What  is  the  effect  upon  a  policy  of 
fraudulent  representations  not  material,  but  which  are  so  in  the  judg- 
ment of  the  insurer  ?  What  clauses  avoid  policy  by  reason  of  parting 
with  interest  in  subject  insured,  or  of  assigning  policy  ?  What  necessity 
of  first  provision  ?  What  result  if  assured  sells  subject-matter,  and  re- 
tains policy  ?  What  are  the  points  of  greatest  difficulty  ?  When  is  pro- 
hibition against  assigning  policy  only  operative  ?  Can  there  be  assign- 
ment after  loss,  and  on  what  principle  ?  What  must  assignment  of  pol- 
icy be  accompanied  by  to  be  of  any  benefit  ?  What  is  application  for 
assignment  of  policy  notice  of?  When  are  policies  assignable  in  equity  ? 
What  must  assignee  possess  himself  of,  to  derive  any  benefit  from  it  ? 
Can  parties  so  word  prohibition  as  to  avoid  policy  in  case  of  assignment, 
and  how?  What  is  sufficient  assignment  of  -poWcj  prima  facie,  where 
there  is  the  usual  prohibition  ?  What  facts  are  sufficient  evidence  with- 
out showing  formal  appointment  by  board  ?  What  facts  originate  inquiry 
into  efl['ect  of  assignment  and  manner  in  which  subsequent  acts  of  as- 
signor aflfect  the  assignee  ?  What  was  the  law  in  the  State  of  Few  York 
previous  to  1858  ?  What  was  the  principle  then  assumed  ?  What  was 
the  doctrine  declared  in  1858  ?  What  was  the  effect  denied  to  the  as- 
signment ?    What  the  resulting  consequence  ? 


PART  m. 

LOSS,  AIvD  PROCEEDINGS  THEEETJPOH'. 

§  603.  In  the  loss  and  its  adjustment  are  involved  several 
verj  important  questions.  The  first  relates  to  the  extent  of 
liability  of  the  insm-er.  The  fire  policy  is  generally  an  open 
one.  It  usually  provides  that  the  insurers  are  to  make  good 
the  loss  or  damage,  to  be  estimated  according  to  the  true 
and  actual  value  of  the  property  at  the  time  the  loss  hapj)ens. 
This,  it  has  been  held,  is  the  true  measure  of  damages,  al- 
though at  the  time  of  the  loss,  the  goods  were  subject  to 


HOW  TO  AliEIYE  AT  AMOUNT  OF  LOSS.  3i7 

duties  ■whicli  had  neither  beeu  paid  nor  secured.  'Wolfe  t. 
The  Hoioard  Insurance  Company,  3  Seld.  683.  This  provi- 
sion in  the  policy,  or,  in  its  absence,  the  legal  nile,  where 
there  is  no  sj^ecial  valuation  in  the  policy,  will  comj)el  the 
insurer  to  pay  to  the  assured  by  way  of  indemnity,  the  true 
and  actual  value  of  the  property  at  the  time  of  the  loss ; 
and  by  this  is  meant  its  intrinsic  value,  divested  of  any 
special  or  adventitious  circumstances  that  might  tend  to 
increase  or  diminish  its  relative  value  or  importance  to  the 
assured.  If  its  loss  to  the  assured  should,  under  the  pecu- 
liar cii'cumstances  of  the  case,  occasion  him  inconvenience 
and  damage  far  beyond  its  actual  value,  still  the  latter 
would  be  all  the  insm-er  could  be  called  upon  to  pay.  It 
is,  however,  competent  for  the  parties  to  fix  a  valuation  upon 
the  property  at  the  time  of  the  insurance,  and  whenever 
that  has  been  done,  the  parties,  in  the  event  of  an  absolute 
loss,  are  bound  by  such  valuation.  As  in  a  case  where  3S0 
kegs  of  tobacco  were  insured,  and  on  the  back  of  the  poKcy 
they  were  stated  as  worth  $9,600,  and  157  kegs  were  burned : 
It  was  held,  the  insurer  was  bound  to  pay  for  the  loss  of  the 
157  kegs  according  to  the  valuation  which  the  parties  them- 
selves had  put  upon  the  whole  number.  Harris  v.  The 
Eagle  Fire  Corajyany  of  Iseiu  YorJc,  5  John.  368.  The  same 
principle  was  also  decided  in  Massachusetts,  although  the  sum 
stated  in  the  policy  exceeded  the  value  of  the  interest  of  the 
assured.  Borden  v.  The  Hingharn  Mutual  Fire  Insxirance 
CoTupany,  18  Pick.  523. 

§  604.  There  is,  in  fire  insurance,  no  such  thing  as  total 
abandonment  to  the  insurer,  or  any  deducting  from  expenses 
of  one-third  new  for  old,  nor  in  general  any  such  thing  as 
general  average,  although  there  may  be  a  general  average 
for  a  sacrifice  made  by  the  insured  for  the  common  good,  in 
a  case  of  necessity.  The  loss  by  fire  is  seldom  a  total  loss, 
and  the  sum  or  valuation  inserted  in  the  policy  is  regarded  as 
fixing  the  maximum  sum  beyond  which  the  insurer  will  not 
be  held  liable.    lie  will  consent,  and  does,  by  the  execution 


34S      DIFFERENCE  BETWEEN   FIKE   AND   MARINE   TOLICIES. 

and  delivery  of  his  policy,  to  insure  so  much  npon  the 
property.  It  is  all  the  risk  he  is  willing  to  run,  and  if  the 
assured  desires  a  further  indemnity,  he  must  seek  it  of  some 
other  insurer.  "No  prudent  company  will  ever  take  too 
many  heavy  risks  in  the  same  immediate  neighborhood,  but 
will  prefer  to  scatter  them  about  in  localities  separate  from 
each  other.  Tlie  distinction  as  to  adjustment  of  loss  be- 
tween fire  and  marine  insurances  is  well  laid  down  by  C.  J. 
Shaw,  in  Trull  v.  The  Roxbury  Mutual  Fire  Insurance 
ComxMny,  3  Ckish.  263,  267-8.  "  In  fire  policies  the  assured 
recover  the  whole  loss,  if  within  the  amount  insured,  with- 
out regard  to  the  proportion  between  the  amount  insured, 
and  the  value  of  the  property  at  risk  ;  whereas,  in  marine 
policies,  the  insurer  pays  only  such  a  proportion  of  the  ac- 
tual loss  as  the  sum  insured  bears  to  the  value  of  the  prop- 
erty at  risk.  For  instance,  on  fire  policies,  if  the  sum  insured 
be  $2,000  on  property  worth  $10,000,  and  the  assured  sus- 
tains an  actual  loss  on  the  whole,  he  recovers  the  whole 
$2,000.  But  in  a  like  case,  on  a  marine  policy,  he  would 
recover  one-fifth  only,  or  $400  ;  being  the  proportion  which 
the  sum  insured  bears  to  the  value  at  risk ;  the  assured 
himself  bearing  the  other  fom*-fifths  of  the  risk.  The  result 
is,  that  every  settlement  of  a  loss  by  fire  is  in  the  nature  of 
an  adjustment  of  a  partial  loss,  although  it  may  amount  to 
the  whole  sum  insured.  It  is  the  payment  of  the  whole  actual 
loss  sustained,  on  the  whole  property  at  risk,  not  exceeding  the 
sum  insured,  without,  regard  to  any  apportionment  between 
the  sum  insured  and  the  property  at  risk,  or  to  any  aban- 
donment, or  technical  or  constructive  total  loss,  or  salvage." 
§  605.  A  question  of  great  interest  and  importance  here 
arises  out  of  the  insurance  efi'ected  by  a  mortgagee  upon  the 
property  mortgaged.  In  case  of  loss  before  the  payment 
of  his  debt,  secured  by  the  mortgage,  what  are  the  relative 
rights  of  mortgagee,  insurer,  and  mortgagor  ?  There  is  no 
doubt  but  that  such  mortgagee  possesses  an  insurable  in- 
terest, and  that  that  interest  extends  to  the  amoun-i  of  his 


EULE  WHEN  MOETGAGEE  INSUEES.  349 

debt.  All  are  agreed  further  that  in  case  of  loss,  tlie  debt 
and  mortgage  still  being  unpaid  and  outstanding,  the  insurer 
is  bound  to  pay  the  amount  insured  to  the  mortgagee  if  it 
docs  not  exceed  the  debt.  Tlie  next  step  brings  us  to  a 
controverted  point.  How  does  the  mortgagee  hold  this 
money,  and  to  whom  belongs  the  debt  due  from  the  mort- 
gagor ?  Does  he  hold  it  in  his  own  right,  still  owning  the 
debt,  or  does  he  hold  it  as  trustee  for  the  insurer  in  case  of 
subsequent  payment  to  him  of  the  debt,  and  is  the  insurer 
then  entitled  to  be  subrogated  to  his  rights  as  to  receiving 
or  enforcing  the  payment  of  the  debt  ?  Li  other  words, 
does  the  insurer  indemnify  him  against  the  loss  of  the  debt, 
or  of  the  property  insured  ?  Mr.  Phillips,  in  2  Phillijps  on 
Insurance^  '2d  Ed.  419,  lays  down  the  rule  to  be  that  the 
insurer  by  payment  of  the  loss  entitles  himself  to  a  propor- 
tional interest  in  the  debt  secured  by  the  mortgage,  and  that 
doctrine  is  explicitly  laid  down  by  Judge  Story,  in  Carjpenter 
V.  Providence  Washington  Insurance  Company^  16  Peters.^ 
495.  It  is  also  put  forth  as  correct  doctrine  by  Chancellor 
"Walworth,  in  Tyler  v.  ^tna  Insurance  Company,  16  We7id. 
385.  The  question,  however,  did  not  directly  arise,  and  was 
not  necessary  to  be  decided  in  either  one  of  these  cases,  es- 
pecially the  latter.  On  the  other  hand,  the  point  was  pre- 
sented  and  extensively  discussed  in  Massachusetts  by  C.  J. 
Shaw,  in  King  v.  The  State  Mutual  Fire  Insurance  Com- 
pany, 7  Cush.  1,  in  which  he  strongly  enforces  the  other 
view  of  the  question,  holding  in  express  terms,  "  that  when 
a  mortgagee  causes  insurance  to  be  made  for  his  own  benefit, 
paying  the  premium  from  his  own  funds,  in  case  a  loss  occurs 
])efore  his  debt  is  paid,  he  has  a  right  to  receive  the  total  loss 
for  his  own  benefit ;  that  he  is  not  bound  to  account  to  the 
mortgagor  for  any  part  of  the  money  so  recovered,  as  a  part 
of  the  mortgage  debt ;  that  it  is  not  a  payment  in  whole  or 
in  part,  but  that  he  has  still  a  right  to  recover  his  whole 
debt  of  the  mortgagor,  and  that  when  the  debt  is  thus  paid 
by  the  debtor,  the  money  is  not,  in  law  or  equity,  the  money 


350        EULE   WHEN   ASSU14ED   HAS   QUALIFIED   PEOPERTY. 

of  the  insurer,  wlio  lias  tlins  paid  tlie  loss,  or  money  paid  to 
liis  use."  A  case  presenting  substantially  the  same  point 
under  a  diflerent  form  has  arisen  in  England,  and  is  found 
in  Dobson  v.  Land,  8  Hare,  216,  in  which  Vice  Chancellor 
Wigram  holds  the  same  doctrine  as  the  Supreme  Court  of 
Massachusetts.  This  latter  case  is  strongly  criticized  by  an 
article  in  13  Law  Reporter,  24:7.  The  very  recent  case  of 
Kernoehan  v.  The  New  York  Bowery  Fire  Lnsurance  Com- 
pany, 17  Weiu  Torh  Rep.  428,  decides  that  in  the  case  of 
insurance  of  mortgaged  property  by  the  mortgagee,  the  in- 
surer undertakes  to  indemnify  against  the  loss  of  the  prop- 
erty, and,  not  of  the  debt,  and  although  this  question  is 
mentioned,  yet  it  was  not  necessarily  involved  in  the  decision 
which  the  facts  of  the.  case  required,  nor  did  the  court  un- 
dertake to  adjudicate  upon  it.  In  view  of  all  these  conflict- 
ing opinions,  it  may  perhaps  be  safe  to  assume  that  this 
question,  so  important  to  the  business  world,  is  yet  an  open 
one  in  general  jurisprudence. 

§  606.  Another  question  of  some  difficulty,  but  involving 
not  so  much  contrariety  of  decision,  relates  to  the  amount  of 
loss  the  assured  is  entitled  to  receive,  in  case  he  has  only  a 
qualified  property  in  the  subject-matter  of  the  insurance. 
"Where,  for  instance,  a  commission  merchant,  or  a  bailee, 
having  only  a  qualified  property  in  the  goods  to  be  sold,  or 
the  thing  bailed,  insures  them  on  his  own  account,  by  virtue 
of  his  insurable  interest ;  the  question  is,  whether  in  case 
of  loss  he  is  entitled  to  receive  the  whole  amount  insured, 
which  may  perhaps  be  the  entire  value  of  the  property,  or 
is  he  limited  to  such  sum  as  would  indemnify  him  for  the 
extent  of  his  interest  in  the  property ;  or  may  he  receive 
the  whole  amount,  holding  all  beyond  what  is  necessary  for 
his  indemnity  as  trustee  for  the  absolute  owner  ?  A  portion 
of  the  same  reasoning  which,  in  this  case,  would  carry  the 
whole  insurance  money  to  the  assm-ed  as  his  own,  would 
sustain  the  position  taken  by  the  Supreme  Court  of  Massa- 
chusetts on  the  question  presented  in  the  last  section.     This 


PKOCEEDIKGS  DT  CASE  OF  LOSS.  351 

question  has  twice  arisen  in  the  State  of  New  York,  and 
once  in  England,  and  it  is  held  that  the  party  insuring,  al- 
though he  may  have  but  a  qualified  property  in  the  thing 
insured,  is  nevertheless  entitled,  in  the  event  of  loss,  to  re- 
ceive the  entire  amount  specified  in  the  policy.  Stillwell 
v.  Staples^  19  N'ew  York  Rep.  401.  Waters  v.  The  Monarch 
Fire  &  Life  Assurance  Comjyany^  5  El.  S  Black.  870. 

§  607.  Tlie  policy  generally  contains  provisions  pre- 
scribing what  proceedings  must  take  place  on  the  part  of  the 
assured  in  the  event  of  loss.  These  require  the  notice  of 
loss  to  be  immediately  communicated  to  the  insurer ;  and 
within  a  reasonable  time  afterwards,  generally  specifying 
what  that  shall  be,  preliminary  proof,  relating  to  the  nature 
and  cause  of  the  loss,  stating  the-  extent  of  it,  and  the  man- 
ner in  which  it  occurred,  the  same  to  be  verified  either  by 
affidavit  or  certificate  of  the  nearest  magistrate,  one  or  both, 
is  to  be  furnished  to  the  insurer.  These  provisions  are 
thus  made  a  part  of  the  contract,  and  are  to  be  as  faithfully 
and  circumstantially  pursued  as  the  nature  of  the  case  and 
situation  of  the  party  will  permit.  The  courts,  when  called 
upon,  have  adopted  diiferent  principles  of.  construction  in 
relation  to  these  provisions.  The  Court  of  Iving's  Bench, 
in  Worsley  v.  Wood,  6  T.  R.  710,  adopted  a  very  strict  and 
rigid  princij^le  of  construction,  holding  that  the  procuring 
the  certificate  was  a  condition  precedent  to  the  recovery, 
and  that  even  where  the  party  who  was  to  sign  it  ^vrongfully 
refused  to  do  so.  In  Leadhetter  v.  The  jEtna  Insurance,  13 
Maine,  265,  the  court  adopt  the  same  principle,  holding  that 
where  the  certificate  of  the  nearest  magistrate  was  required, 
and  the  certificates  of  neither  one  of  the  two  nearest  could 
be  obtained,  and  that  of  the  third,  who  was  the  next  nearest, 
was  ;  the  assured  was  denied  all  remedy,  as  the  production 
of  the  certificate  of  the  nearest  magistrate  was  a  condition 
precedent.  In  the  State  of  ISTew  York,  the  courts  have 
adopted  a  diiferent  principle,  construing  such  provisions 
with  great  liberality  ;  requiring  only  reasonable  infonnation 


352  WAIVER  A3  TO  PRELIMINAPwT   PROOFS. 

to  be  given,  to' enable  tlie  company  to  form  some  estimate 
of  their  rights  and  duties  before  they  are  obliged  to  pay. 
The  account  of  loss  was  deemed  sufficient,  although  in  a 
very  general  form.  McLmtgJdin  v.  The  Washington  County 
Mutual  Insurance  Company,  23  Wend.  525.  So  where 
the  provision  in  the  policy  required  the  certificate  of  a 
magistrate  or  notary  the  most  contiguous  to  the  place  of 
the  fire,  C.  J.  Nelson  declined  going  into  a  nice  calcula- 
tion of  distances  to  settle  the  j^oint  upon  the  laws  of  mensu- 
ration ;  insisting  that  the  spirit  of  the  condition  required  no 
such  mathematical  precision,  and  that  its  object  is  com- 
pletely secured  by  the  proximity  of  the  certifying  magis- 
trate. Turley  v.  The  North  American  Fire  Insurance 
Company,  25  Wend.  374.  •  And  so  in  a  recent  case,  where, 
under  a  similar  provision,  the  assm-ed  produced  the  certifi- 
cate of  a  magistrate  residing  near  but  not  nearest  to  the 
place,  and  the  insurers  objected  to  paying  the  loss,  hut  not 
on  that  ground,  it  was  held  that  the  objection  was  waived ; 
that  if  it  was  to  be  insisted  on,  the  insurers  should  have 
pointed  it  out,  so  that  a  new  one  could  have  been  supplied. 
G^Neil  V.  The  Buffalo  Fire  Insurance  Company,  3  Comst. 
122. 

§  608.  Another  question  that  has  frequently  been  pre- 
sented to  the  courts,  relates  to  the  circumstances  under  which 
the  insurers  will  be  taken  to  have  waived  all  objection  to 
the  insufiiciency  of  the  preliminary  proofs,  and  hence  to 
have  precluded  themselves  from  taking  any  advantage  of 
their  defects.  In  one  case,  where  the  mortgagee  insured  the 
mortgaged  premises  in  his  own  name,  and  for  his  own  bene- 
fit and  that  of  the  mortgagor,  the  latter  paying  the  pre- 
mium, and  the  notice  and  preliminary  proofs  were  furnished 
in  the  name  of  the  mortgagor,  and  no  objection  was  taken 
until  after  suit  brought ;  held,  the  insurers  could  not  object 
that  they  were  not  in  the  name  of  the  assured.  Kernoehan 
V.  TheNexo  YorTi,  Bowery  Fire  Insurance  Company,  Vjlfeio 
York  Rep.  428.    In  another  case  it  was  held  that  all  formal 


DIFFKKENT  KUTDS  OF  INSUEANCE  COMPANIES.  353 

defects  in  the  preliminaiy  proofs  are  waived,  if  the  insurers, 
without  noticing  them,  put  their  refusal  to  pay  upon  some 
other  ground.  McMasters  v.  The  North,  American  Fire 
Insurance  Company^  23  Wend.  43.  So  in  a  more  recent 
case,  where  the  company  declined  paying,  but  neglected  spe- 
cifically to  object  to  the  form  or  time  of  service  of  the  proofs, 
any  defects  that  might  exist  were  held  to  be  waived.  Bum- 
stead  V.  The  Dividend  Mutual  Insurance  Company,  2  Kern. 
81.  So  where  the  insurers  received  preliminary  proofs  that 
were  insufiicient,  but  gave  no  notice  to  the  assured  of  their  de- 
fects, but,  without  any  further  notice  to  the  latter,  procured 
themselves,  within  the  time  specified,  the  necessary  affida- 
vits, it  was  held  that  this  was  a  sufficient  compliance  with 
the  provision  by  the  assured.  Sexton  v.  The  Montgomery 
County  Mutual  Insurance  Company.,  9  Barh.  191.  So, 
also,  partial  payment  of  the  loss,  by  the  insurer,  is  a  waiver 
of  the  preliminary  proofs.  Westlake  v.  The  St.  lawrence 
County  Mutual  Insurance  Company,  14  Barh.  206. 

§  609.  To  do  the  work,  and  meet  promptly  the  liabilities 
of  the  insurer,  requires  large  amounts  of  capital  in  such  a 
shape  as  to  be  readily  accessible.  Tliis  is  seldom  under- 
taken except  by  incorporated  companies,  and  of  these  there 
are  two  kinds.  The  one,  and  much  the  elder  of  the  two, 
are  stocTc  companies.,  in  which  the  capital  stock  is  created  and 
defined  by  the  charter,  and  the  corporators  become  such  by 
purchase  and  ownership  of  the  shares.  The  sale  and  pay- 
ment for  the  shares  gives  the  corporation  the  capital  required 
in  their  operations.  A  sufficient  amount  of  tliis  is  kept  on 
hand  for  current  expenses  and  payments  in  case  of  loss, 
while  investments  may  be  made  of  such  portions  as  are  not 
immediately  required.  The  profits  realized  arc  distributed 
by  way  of  dividends  to  the  stockholders.  These  incorpo- 
rated companies  have  nothing  peculiar  to  themselves,  and 
are  governed  by  the  general  principles  of  law  applicable  to 
corporations. 

§  610.  More  recently,  and  within  the  last  half  century, 
23 


354  MUTUAL  mSUKANCE  COMPANIES. 

another  kind  of  insurance  companies  have  appeared,  called 
Mutual  Insurance  Comjpanies,  whose  organization  is  entirely 
different  from  the  stock  companies,  and  out  of  which  has 
grown  a  good  deal  of  litigation.  The  principle  of  their 
construction  is  simple,  although  when  their  machinery  be- 
comes deranged  in  its  operation,  quite  a  degree  of  complica- 
tion is  experienced.  The  principle  is  a  common  contribution 
of  credit,  in  which  is  to  be  found  the  means  of  indemnity 
against  individual  losses.  Upon  the  organization  of  the 
company,  the  most  generally  for  the  effecting  of  marine  or 
fire  insurances,  risks  are  solicited.  The  party  who  gets  hia 
property  insured  becomes  a  member  of  the  company  during 
the  period  of  time  for  which  he  insures.  He  pays  down  a 
small  sum  sufficient  to  cover  the  actual  expenses  of  the  sur- 
vey, policy,  (fee,  and  executes  and  delivers  to  the  company 
a  premium  note  for  such  amount  as  they  require  for  the 
premium  of  insurance,  receiving  in  return  the  policy.  Thi^ 
is  in  the  usual  form  of  other  policies,  containing  generally 
the  same  provisions  and  conditions,  and  in  addition  often 
making  the  by-laws  of  the  company  a  part  of  it.  The  pre- 
mium note  pledges  the  personal  liability  of  the  assured  to 
contribute  his  proportion  towards  the  payment  of  all  losses 
which  the  company  may  be  called  upon  to  make  good  while 
he  continues  a  member  of  it,  that  is,  dm-ing  the  period  of 
his  insurance.  When  the  losses  require  it.  the  company 
make  assessments  upon  their  premium  notes,  the  pa^nnent 
of  which,  when  required,  is  usually  made  a  condition  to  the 
continuance  of  membership  in  the  company  so  far  as  regards 
their  liability  for  future  losses. 

§  611.  It  will  thus  be  perceived  that  the  capital,  at  the 
commencement  of  business,  must  consist  of  the  loan  or  pledge 
of  the  credit  of  those  who  are  insured  in  the  company  ;  and 
as  it  is  impossible  to  secure  in  the  outset  a  sufficient  number 
of  small  premium  notes  to  make  any  considerable  aggregate 
amount  of  capital,  it  is  usual  for  those  the  most  instrumental 
in  getting  up  the  company,  and  who  are  confident  of  its  sue- 


irUTUAL  INSUEANCE  COMPANIES.  355 

cess,  to  loan  their  individual  credit  in  mueli  larger  sums, 
either  with  the  expectation  of  taking  out  policies  in  the  fu- 
ture, or  to  enable  the  company  to  gain  credit  with  the  com- 
munity. Tlie  act  of  incorporation  sometimes  makes  provi- 
sion that  the  company  may  be  authoi-ized  to  receive  notes 
for  premiums  in  advance,  of  persons  intending  to  receive  its 
policies,  and  to  negotiate  such  notes  in  the  course  of  its 
business.  This  is  the  effect  of  the  provision  contained  in 
section  5  of  the  general  act  authorizing  the  formation  of 
mutual  insurance  companies  passed  by  the  Legislature  of 
the  State  of  'New  York  in  1849.  Tlie  ultimate  capital  stock 
of  these  companies  is  the  accumulation  of  earnings  above 
the  losses. 

§  612.  The  questions  arising  between  the  company  and 
the  assured  in  the  event  of  loss,  are  similar  to  those  arising 
in  all  other  cases  of  insurance,  except  in  those  respects  in 
which  the  peculiar  organization  of  the  company  may  requu'C 
the  application  of  a  different  principle.  One  instance  of 
this  arises  out  of  the  facts  of  giving  the  premium  note, 
subsequent  forfeiture  of  the  policy,  and  assessment  by  the 
company  on  the  note  with  a  knowledge  of  the  facts  causing 
the  forfeiture.  What  effect  has  this  upon  the  policy  ?  Are 
the  policies  and  premium  notes  independent  contracts,  each 
caj)able  of  subsisting  without  the  other  ;  or  are  they  so  inti- 
mately connected  that  they  can  only  co-exist,  and  that  hence 
if  the  company  choose  to  treat  the  premium  note  as  a  valid 
subsisting  one,  by  making  and  receiving  assessments  upon 
it,  with  a  knowledge  of  the  facts  that  have  caused  a  forfeit- 
ure of  the  policy,  is  that  of  itself  a  waiver  of  the  forfeiture, 
and  revival  of  their  liability  in  case  of  loss  ?  Of  this  ques- 
tion courts  have  taken  different  views,  and  as  one  of  gen- 
eral jurisprudence,  it  may,  perhaps,  still  be  considered  ojjcn. 
See  sustaining  their  independence,  JVcw  Eiujland  Fire  In- 
surance Company  v.  Butter^  34  Maine ^  451,  and  Swanscot 
Machine  Company  v.  Partridge,  5  Fost.  3G9.  And  on  the 
other  side  sustainincr  their  co-existence,  and  mutual  ueccs- 


356  MFTUAL  INSURANCE  COMPAlHES. 

sity  to  cacli  other,  Viall  v.  Genesee  Mutual  Insurance 
Company,  19  Barb.  440,  and  Wilson  v.  Trumhull  Mutual 
Fire  Insurance  Company,  19  Penn.  372.  Frost  v.  The 
Saratoga  Mutual  Insurance  Corrvpany,  5  Denio,  154,  and 
Smith  V.  The  Saratoga  County  Mutual  Insurance  Company, 
3  Hill,  508 ;  in  whicli  the  court  held  that  where  the  company, 
with  a  knowledge  of  the  facts  constituting  a  forfeiture  of  the 
policy,  had  assessed  the  premium  note  for  losses  which  had 
occurred  before  the  forfeit/are,  the  policy  was  not  thereby 
revived. 

§  613.  The  anxiety  to  ohtain  risks,  and  the  zeal  of  agents 
paid  generally  by  a  percentage  on  the  risks  they  can  procure, 
or  the  permium  notes  or  amounts  of  cash  they  can  secure 
for  the  company,  has  occasioned  the  transacting  of  business 
in  so  reckless  and  improvident  a  manner,  as  often  to  result 
in  the  utter  failures  and  insolvencies  of  these  companies ; 
and  whenever  this  occurs,  and  the  effects  go  into  the  hands 
of  receivers  to  wind  up  their  affairs,  questions  of  difficulty 
often  arise  between  them  and  their  former  members,  growing 
out  of  the  notes  given  on  the  taking  out  of  policies,  or  in 
the  expectation  of  it.  Are  such  notes  given  upon  sufficient 
consideration  as  between  the  company  and  the  makers,  and  ■ 
to  what  extent  are  they  enforceable  ?  In  these  cases,  in  some 
instances,  the  charter  of  the  company  has  authorized  it  to 
receive  premium  notes  in  advance  of  persons  intending  to 
take  out  policies,  and  also  to  negotiate  them  in  the  course 
of  its  business,  paying  to  the  makers  a  compensation  not 
exceeding  five  per  cent,  per  annum  on  so  much  of  the  notes 
as  exceeded  the  premiums  on  policies  actually  taken.  A 
note  given  under  .such  circumstances  has  been  held  valid 
and  enforceable  for  the  sum  due  on  its  face,  although  the  pre- 
mium on  insurances  received  by  the  maker,  amounted  to 
only  a  part  of  it.  It  was  held  that  there  was  sufficient  con- 
sideration. Deraismes  v.  The  Merchants  Mutual  Insur- 
ance Company,  1  Comst.  371.  In  Brown  v.  Crooke  cfe 
Towks,  4  Comst.  51,  the  court  reaffirm  the  same  principle, 


LIABILITIES   OF   MEMBEKS   OF   MrXUAL   INS.    COS.       •  357 

and  apply  it,  althougli  the  makers  of  the  notes  had  given 
them  to  the  company,  stipulating  that  they  "  were  to  he  in 
advance  for  premiums  on  policies  of  insurance,  which  they 
agreed  to  take  thereafter,  and  after  giving  the  same,  they 
had  taken  out  no  policies.  In  WJiite  v.  Ilaight,  IG  New 
York  Rep.  310,  it  was  held  that  a  note  given  upon  the  same 
principle  was  not  held  by  the  company  as  a  guaranty,  and 
recoverable  only  to  the  extent  of  a  just  proportion  of  the 
losses  and  expenses,  but  that  it  was  payable  absolutely,  and 
that  there  was  no  occasion  for  an  assessment ;  for,  the  cor- 
poration being  insolvent,  the  receiver, — the  plaintiff  in  the 
action, — was  entitled  to  enforce  all  the  securities  belonging 
to  it  for  the  purpose  of  paying  its  debt.  It  was  also  held  to 
be  no  defence  that  the  losses,  to  which  the  money  if  col- 
lected, would  be  applied,  occun-ed  subsequent  to  the  period 
for  which  the  maker  of  the  note  was  insured,  or  that  in  re- 
spect to  such  losses  no  assessment  had  been  made  u^ion  other 
notes  given  to  the  company.  The  principle  is  here  broadly 
asserted,  that  all  notes  of  this  character  are  intended  to  be 
actual  securities  for  the  money  mentioned  in  them,  that  they 
may  be  collected  at  maturity,  and  the  amount,  if  not  required 
for  immediate  expenditure,  should  be  invested  in  more  safe 
and  2)ermancnt  securities.  In  Savage  v.  Medhury,  19  I^ew 
York  Rep.  32,  it  was  held  that  where  a  note  was  not  one  of 
those  given  at  the  formation  of  the  company,  under  section 
5  of  the  general  act,  (as  was  the  fact  in  White  v.  Ilaight,) 
an  assessment  is  a  necessary  condition  to  the  maintenance 
of  an  action,  by  the  receiver  of  a  mutual  insurance  company, 
against  the  maker  of  it,  and  that  the  receiver  stands  in  the 
place  of  the  company,  and  can  recover  only  when,  and  to 
the  extent,  that  the  company  itself  could  have  done.  Li 
Bangs  v.  Gray,  2  Kern.  477,  it  was  held  that  a  member  of 
a  mutual  insurance  company,  not,  however,  incorporated 
under  the  general  act,  is  liable  to  be  assessed  upon  his  de- 
posit note  for  losses  in  the  proportion  which  the  amount  of 
his  note  bears  to  the  aggregate  of  deposit  notes  which  are 


358  -  QUESTIONS. 

collectable  and  subject  to  assessment  for  siicli  losses ;  that 
if  other  mombers,  legally  assessable,  are  unable  to  pay  the 
amounts  assessed,  those  -who  are  able  are  liable  to  be  assessed ' 
to  make  up  all  such  deficiencies. 

QUESTIONS. 

Is  a  fire  policy  open  or  valued  ?  What  docs  it  nsnally  provide  ? 
"What  is  the  iusurer  to  pay  in  case  of  loss  ?  "What  is  meant  by  the  rule? 
Das  the  assured  any  claim  beyond  actual  value  ?  Can  parties  fix  a 
valuation  so  as  to  be  bound  by  it  ?  "When  to  be  affixed  ?  What  illustra- 
tion ?  What  is  there  wanting  in  fire  insurance  that  is  found  in  marine? 
How  is  the  sum  or  valuation  regarded  in  the  policy  ?  What  is  the  differ- 
ence as  to  adjustment  of  loss  between  fire  and  marine  insurances  ?  Has 
a  mortgagee  an  insurable  interest,  and  to  what  exent,  and  when  does  it 
terminate?  Suppose  a  loss,  and  the  insurance  money  paid,  to  whom 
does  it  belong  ?  To  the  assured  absolutely  or  conditionally  subject  to 
payment  of  the  debt  ?  And  what,  if  any,  are  the  rights  of  the  insurer 
in  reference  to  the  debt  ?  What  is  the  assured  entitled  to  receive  when 
he  has  only  a  qualified  property  in  the  thing  insured  ?  The  whole  amount 
of  the  insurance,  or  to  the  extent  of  his  interest  ?  What  provisions  in 
the  policy  prescribing  proceedings  in  the  event  of  loss  ?  How  are  these 
provisions  to  be  regarded,  and  how  pursued  ?  What  principles  of  con- 
struction adopted  by  the  courts  of  England,  and  some  in  this  country  ? 
What  adopted  by  the  courts  of  the  State  of  New  York  ?  What  illus- 
trations ?  When,  and  under  what  circumstances,  are  defects  in  prelimi- 
nary proofs  waived  by  the  insurers?  What  cases  in  illustration?  How 
is  the  capital  stock  of  stock  companies  created  ?  How  do  corporators 
become  such  ?  What  gives  the  corporation  its  available  capital  ?  How 
are  the  profits  distributed  ?  What  is  the  principle  upon  which  mutual 
insurance  companies  are  organized  ?  What  does  the  party  getting  his 
property  insured  become  ?  And  for  what  period  ?  What  does  he  pay 
down  ?  What  does  he  execute  and  deliver  ?  WTiat  receive  ?  What  is 
in  the  policy  additional  to  other  policies  ?  What  is  the  effect  of  the 
premium  note  ?  What  do  the  company  do  in  the  event  of  losses  ?  What 
does  the  capital  stock  consist  of  at  the  commencement  of  business  ? 
What  beyond  small  premium  notes  is  it  necessary  to  obtain  ?  What  is 
it  usual  for  those  getting  up  the  company  to  do  ?  What  does  the  act  of 
incorporation  make  provision  for  ?  Wiiat  is  the  ultimate  capital  stock  ?  In 
what  respect  are  questions,  as  here  arising  between  the  company  and  the 
assured,  different  from  those  arising  in  other  cases  of  insurance  ?  Suppose 
a  premium  note  assessed  subsequent  to  a  known  forfeiture  of  the  policy, 


DEFnmTON  A^T)   OBJECTS   OF  LIFE   INSUEANCE.  359 

Is  that  a  waiver  of  the  forfeiture  ?  Docs  it  revive  the  liability  of  tho 
company  ?  "What  eflfect  if  made  on  losses  previous  to  forfeiture  ?  "What 
do  difficulties  between  the  company  and  its  members  usually  grow  out 
of?  Are  such  notes  given  upon  sufficient  consideration  ?  Under  what 
authority  are  they  commonly  given  ?  "When  given  at  the  organization 
of  a  company  under  the  general  act,  how  are  they  regarded,  what  their 
character,  when,  and  to  what  extent  enforceable  ?  When  given  subse- 
quent to  formation  of  company,  what  necessary  before  action  can  be 
brought  and  maintained  ?  In  companies  not  incorporated  under  general 
act,  in  what  proportion  is  premium  note  hable  to  assessment,  and  what 
deficiencies  to  be  made  up,  and  how  ? 


III.    LIFE    INSURANCE. 

§  614.  Life  insurance  is  a  contract  by  wliicli  tlio  insurer, 
in  consideration  of  a  certain  premium,  consisting  either  of 
a  gross  sum  or  of  certain  annual  payments,  undertakes  to 
pay  to  the  person  for  whose  beneiit  the  insurance  is  made, 
a  certain  sum  of  money  or  aimuity,  on  the  death  of  the 
person  whose  life  is  insured,  or  on  the  happening  of  an  event 
depending  on  such  life.  The  engagement  may  be  cither 
to  pay  a  certain  sum  upon  the  death  of  the  party  whose  life 
is  insured,  or  to  insure  at  a  certain  sum  the  continuance  of 
the  life  for  a  certain  number  of  years.  In  either  case,  the 
consideration  to  the  insurer  may  be  cither  a  gross  sum  paid 
down  at  once,  or  the  annual  payment  of  a  certain  sum  during 
the  continuance  of  the  insm-ance.  The  objects  generally 
sought  to  be  attained  are  the  following  : 

1.  In  case  of  marriage,  investments  arc  sometimes  re- 
quired to  be  made  as  a  provision  for  a  wife  and  children  in 
case  of  their  survivorship.  Tlie  securing  a  certain  sum  to 
be  paid  for  their  benefit  in  the  event  of  death,  answers  as  a 
substitute,  allowing  the  husband,  in  the  mean  time,  the  use 
of  the  capital. 

2.  The  husband  and  father  of  a  family,  by  means  of  a 


3G0         THE   INTEREST   KEQUIEED   IN   THE   LIFE   INSURED. 

small  annual  payment,  can  thus  provide  for  his  wife  and 
children  in  case  of  his  removal  by  death. 

3.  Any  one  unmarried  can  make  a  similar  provision  for 
friends  or  relatives. 

4.  A  creditor  can,  by  insuring  the  life  of  his  debtor, 
create  an  additional  security  for  the  payment  of  his  debt. 

5.  A  man  may  strengthen  his  own  credit  by  procuring 
his  life  to  be  insured  a  certain  number  of  years,  assigning 
the  policy  to  his  creditors.  Thus  life  insurance  can  be  ren- 
dered available  in  a  variety  of  different  ways.  "With  slight 
exception,  however,  it  is  only  in  England  and  America  that 
the  desu'e  of  providing  for  the  future  has  originated  and 
carried  into  effect  this  species  of  insurance. 

§  615.  The  law  will  not  permit  this,  more  than  any  other 
kind  of  insurance,  to  be  a  mere  gambling  contract.  Hence 
it  requires  an  interest  in  the  life  insured  to  effect  a  valid  in- 
surance. The  first  inquiry  that  arises  relates  to  what  consti- 
tutes a  sufficient  interest.  Any  one  is  held  to  have  a  sufficient 
interest  in  his  own  life  to  make  it  the  subj  ect  of  legal  insurance. 
So  a  creditor  has  such  an  interest  in  the  life  of  his  debtor  as 
to  enable  him  to  insure  it  upon  his  own  account  to  the  extent 
of  his  debt ;  and  a  partnership  creditor  may,  upon  the  same 
principle,  insure  the  life  of  either  partner.  At  the  time 
of  the  creation  of  the  debt  it  is  often  made  a  part  of  the 
security  that  the  life  of  the  debtor  shall  be  insured,  and  the 
policy  assigned  to  the  creditor.  It  is  not,  however,  every 
interest  in  the  life  of  another  that  is  insurable.  A  person 
has  not,  simply  in  the  character  of  husband  and  father, 
an  insurable  interest  in  the  life  of  his  wife  or  child.  To  be 
sufficient  it  must  be  a  direct,  pecuniary  interest.  The  child 
has  an  insurable  interest  in  the  life  of  his  father  where  he  is 
dependent  for  support  upon  a  fund  which  ceases  at  his  father's 
death.  A  single  woman  who  is  dependent  on  her  brother 
for  her  support  and  education,  has  a  sufficient  interest  in 
his  life  to  entitle  her  to  insm-e  it.  In  !N"ew  York  and  several 
of  the  States,  by  statute,  a  married  woman  may  insm-e  in  her 


STATEMENTS  ON  "WHICH  POLICY  IS  ISSUED.  361 

own  name,  or  in  that  of  another,  Tvith  his  assent,  the  life  of 
her  husband,  and  in  the  event  of  his  death,  will  be  entitled 
to  the  proceeds  of  the  policy  in  preference  to  his  creditors. 
§  616.  The  policy  is  issued  upon  the  strength  of  state- 
ments contained  in  answers  to  questions  by  the  assured,  his 
friend,  his  medical  adviser,  and  usually  the  report  of  the 
physician  of  the  company.  Tlie  questions  to  which  answers 
are  the  most  commonly  required  arc,  the  name,  residence, 
and  occupation,  place,  and  date  of  birth  ;  whether  he  has, 
at  any  time,  been  afflicted  with  gout,  rupture,  insanity, 
liver  complaint,  fits,  or  convulsions,  and  whether  he  has 
had  symptoms  of  consumption,  spitting  of  blood,  asthma, 
or  any  disease  of  lungs  or  chest ;  whether  he  ordinarily 
enjoys  good  health,  and  is  aware  of  any  disorder  or  circum- 
stances tending  to  shorten  life,  or  to  make  an  assurance 
more  than  usually  hazardous.  If  these  statements,  or  any 
of  them,  are  incorporated  into  the  policy,  or  recited,  and 
thus  incorporated  by  reference,  they  so  far  become  part 
of  it,  and  thus  partake  of  the  nature  of  a  warranty,  requiring 
a  literal  compliance  with  the  statement,  whether  the  party 
is,  or  is  not,  apprised  of  its  untruth.  These  statements  are" 
not,  however,  ordinarily  spread  out  upon  the  policy,  but 
they  are  frequently  so  referred  to  as  to  be  made  a  part  of  it. 
When  they  are  not  thus  incoi-porated  or  made  a  part  of  it, 
they  are  not  regarded  as  warranties,  but  simply  as  represen- 
tations. In  this  latter  case  it  is  sufficient,  if  they  arc  made 
and  given  in  good  faith,  and  are  true  in  substance.  If  these 
partake  of  the  nature  of  a  representation  merely,  they  should 
be  material  in  order  to  avoid  the  policy.  But  if  immaterial 
and  fraudulently  made,  they  will  still  avoid  the  policy  if 
the  insurer,  at  the  time,  deemed  them  material  to  the  risk. 
Valton  V.  The  National  Fund  Life  Assurance  Company, 
20  Neio  York  liep.  32. 

§  617.  Much  of  the  litigation  that  has  occurred  in  actions 
brought  upon  these  policies,  has  arisen  out  of  defences  inter- 
posed to  their  enforcement,  growing  out  of  alleged  violations 


362  EISKS  ASSUMED  ET  TIIE  INSUEEE. 

of  warranty  or  untruthfulness  in  representation.  The  rulo 
is,  if  there  be  no  warranty,  or  representation,  or  fraud,  the 
insurer  takes  the  risk  of  the  goodness  of  the  life  he  under- 
takes to  insure.  If  he  desires  any  knowledge  beyond  what 
is  apparent,  he  is  at  liberty  to  question ;  and  all  relevant 
questions  devolve  upon  the  applicant  the  duty  of  answering 
faithfully  and  truthfully.  The  answer,  however,  must  be 
full  to  the  question,  and  hence  in  a  case  where  the  represen- 
tations were  to  be  considered  a  part  of  the  policy,  if  in  the 
making  of  those  on  the  strength  of  which  the  insurance  was 
effected,  a  material  fact  is  untruly  stated  or  concealed,  the 
policy  will  be  void,  although  no  specific  questions  are  asked 
respecting  such  fact,  provided  a  general  question  is  put 
which  would  include,  and  was  calculated  to  elicit,  that  fact ; 
and  this,  although  the  omission  results  rather  from  accident 
or  negligence  than  froin  design.  Yose  v.  The  Eagle  Life 
and  Health  Insurance  Company^  6  Cush.  42. 

§  618.  In  the  absence  of  any  warranty  or  condition  on 
the  part  of  the  assured,  the  insurer  takes  all  risks,  imless  he 
can  show  a  fraudulent  concealment  or  misrepresentation,  or 
a  non-communication  of  material  facts  known  to  the  assured ; 
and  either  one  of  these  will  avoid  the  policy.  In  this  kind 
of  insurance  much  reliance  is  necessarily  placed  upon  the 
communications  of  the  insm-ed,  especially  in  relation  to  his 
past  history,  and  the  diseases  or  difficulties  with  which  he 
may  have  been  afiiicted,  and  those  which  may  be  considered 
hereditary  in  his  family.  His  application  for  insurauce 
binds  him  to  disclose  all  material  facts  within  his  knowl- 
edge ;  and  if  he  supposes  any  fact  relevant  to  the  matter,  he 
must  take  the  responsibility  of  its  turning  out  to  be  imma- 
terial, and  hence  an  innocent  concealment ;  because  it  is  the 
province  of  the  jury  to  decide  on  the  materiality  of  facts, 
and  his  own  belief,  therefore,  relating  to  its  materiality  or 
the  reverse,  is  of  little  or  no  importance.  If  he  commmii- 
cates  every  fact  within  his  knowledge  fairly  bearing  on  the 
question,  he  has  done  all  the  law  requires  of  him,  but  if  he 


COimUNICATIONS  FEOM  THE  ASSUKED.  SC3 

chooses  to  speculate  on  what  he  can  safely  communicate  and 
what  withhold,  he  must  take  the  responsibility  of  the  con- 
clusions to  which  he  arrives  and  upon  which  he  acts.  And 
although  it  is  expressly  stipulated  that  the  policy  shall  be 
void  on  untrue  answers  being  given  to  certain  written  in- 
quiries, thus  creating  a  seeming  exclusion  as  to  those  which 
are  verlal,  yet  it  was  held  that  a  verhal  misrepresentation 
vitiates  the  policy.  Wainwright  v.  Bland,  1  Mee.  d?  Wels. 
32.  In  Swete  v.  Fairlie,  6  Carr.  cfi  P.  1,  a  question  of 
great  interest  was  presented  as  to  the  effect  of  the  omission 
to  communicate  the  fact  that  some  years  j^reviously  the  life 
insured  was  afflicted  with  a  disorder  tending  to  shorten  life, 
but  of  a  character  such  as  to  deprive  the  individual  of  all 
consciousness  during  its  continuance,  such  as  insanity,  and 
it  was  held  the  omission  was  not  fatal  to  the  policy.  Under 
the  earlier  forms  of  insurance  in  which  the  warranty  of  good 
health  at  the  time  of  the  contract  was  the  principal  warranty 
rehed  upon,  questions  arose  as  to  the  effect  of  former  dis- 
eases, or  of  wounds  formerly  received,  as  in  lioss  v.  Brad- 
shaio,  1  Wm.  Black.  312,  where  the  statement  of  them  was 
omitted,  and  the  disease  causing  death  was  wholly  uncon- 
nected with  them.  Tlie  general  conclusion  was  that  they 
did  not  avoid  the  policy.  At  the  present  time,  however,  the 
questions  put  are  of  such  a  searching  character,  and  the  in- 
vestigations so  thorough,  as  rarely  to  leave  questions  of  that 
kind  open  to  litigation.  Under  the  clause  that  the  "  assured 
has  no  disorder  tending  to  shorten  life,"  some  curious  ques- 
tions have  occasionally  been  presented,  as  in  Watson  v. 
Mainioaring,  4  Taunt.  763,  where  the  point  arose  whether 
dispepsia  was  a  disease  tending  to  shorten  life.  And  the 
court  held  tliat  it  was  not,  "  that  all  disorders  have,  more 
or  less,  a  tendency  to  shorten  life,  even  the  most  trilling ; 
that  if  dispepsia  was  a  disorder  that  tended  to  shorten  life, 
within  this  exception,  the  lives  of  half  the  members  of  the 
profession  of  the  law,  would  be  uninsural)le." 

§  619.  Life  policies  are  now  carefully  guarded  by  condi- 


364  LITE  POLICIES  ASSIGNAJiLE. 

tions  which  rccjuire  a  strict  observance  to  prevent  their  for- 
feiture. They  frequently  contain  a  condition,  that  the  policy 
shall  be  void  if  the  insured  shall  die  upon  the  high  seas  or 
the  great  lakes ;  or  shall  pass  beyond  the  settled  limits  of 
the  United  States,  and  of  the  British  provinces ;  or,  if  he  live 
in  the  IS^orthern  States,  south  of  the  States  of  Yirginia  and 
Kentucky.  And  also  if  he  enter  in  the  military  or  naval 
service,  or  if  he  die  by  suicide  or  in  a  duel,  or  by  the  hands 
of  justice.  The  question  whether  death  by  suicide,  when 
the  result  of  insanity,  is  such  a  violation  of  the  condition  as 
to  defeat  the  policy,  has  arisen  and  been  differently  decided 
by  the  English  and  American  Courts.  In  the  former,  in 
Clift  V.  Schwdble^  3  Manning,  Granger  &  Scott,  437,  the 
broad  ground  was  taken  that  the  terms  of  the  condition  in- 
cluded all  acts  of  voluntary  self-destruction,  and  that 
whether  he  was,  or  was  not,  a  responsible  moral  agent,  was 
immaterial.  In  Breasted  v.  The  Farni-eri  Loan  and  Trust 
Company,  reported  first  in  4  Hill,  73,  and  affirmed  in  4 
Seld.  299,  it  was  held  that  if  the  insured  died  of  suicide,  while 
insane,  the  case  is  not  within  the  exception. 

§  620.  It  has  never  been  doubted  but  that  policies 
of  life  insurance  were  assignable.  There  is  no  statute  re- 
straining it  in  this  country,  and  nothing  tending  to  qualify 
it  unless  the  statute  against  gaming  and  wagering  has  that 
effect.  But  the  doctrine  is  now  clearly  settled  by  the  case 
of  Ashley  v.  Ashley,  3  Simons,  149,  in  England,  and  St. 
John  V.  The  American  Mutual  Life  Lnsuranee  Company, 
3  Kern.  31,  in  this  country.  A  policy  valid  in  its  inception 
is  a  chose  in  action,  and  governed  by  the  same  principles 
applicable  to  other  agreements  involving  pecuniary  obliga- 
tions. "Whatever  may  be  the  consideration  of  the  assign- 
ment, the  assignee  is  entitled  to  recover  against  the  insurers 
the  whole  face  of  the  policy.  Nor  is  it  essential  that  the 
assignee  should  have  an  insurable  interest  in  the  life  of  the 
insured  to  entitle  him  to  recover.  It  is  sufficient  if  ho 
proves  a  valid  assignment  of  a  policy  legal  in  its  inception. 


CHAEACTEE  AND  COMMENCEMENT  OF  EISK.  3G5 

§  621.  Another  question  wliicli  may  b6  considered  as  in- 
volved in  the  last  as  broadly  decided  in  the  case  referred  to, 
relates  to  the  point  whether  a  life  policy  embraces  a  contract 
merely  of  indemnity,  or  one  which  is  to  be  executed  accord- 
ing to  its  terms.  The  English  courts  at  first  regarded  it  in 
the  light  of  an  indemnity  only,  and  in  Godtall  v.  Boldero, 
9  East.  72,  held  that  where  a  creditor  insured  the  life  of  his 
debtor,  he  obtained  only  an  indemnity  against  the  loss  of 
his  debt,  and  that  its  payment  by  the  debtor  barred  all  re- 
covery upon  the  policy.  But  that  doctrine  has  since  been 
reversed  in  Dolby  v.  The  India  and  London  Life  Assurance 
Company^  15  Common  Bench  Bejp.  365,  also  in  80  Engl. 
Com.  Law  Bep.  364,  in  which  it  was  denied  that  the  con- 
tract of  life  insurance  was  one  of  indemnity,  holding  that 
where  a  party  had  an  interest  in  the  life  insured  at  the  time 
the  policy  was  efiected,  the  fact  of  his  interest  ceasing  in 
such  life,  before  the  death,  did  not  invalidate  the  policy. 
Tlie  same  principle  affirmed  in  this  country  in  St.  John  v. 
The  American  Mutual  Life  Insurance  Company,  3  Kern.  31. 

§  622.  The  commencement  of  the  risk  dates  from  the 
unconditional  acceptance  of  the  proposition  to  insure,  and 
hence  where  the  insurers  by  letter  had  made  known  the 
terms  upon  which  they  would  insure,  and  the  insured  had 
in  reply  mailed  a  letter  properly  directed,  containing  an 
acceptance  of  the  proposition,  together  with  the  premium, 
it  was  held  to  constitute  a  sufficient  contract  of  insurance. 
Tayioe  v.  The  Merchants  Fire  Insurance  Company^  7  How. 
TJ.  S.  Bep.  390.  Tlie  loss  must  occur  within  the  period  of 
insurance,  and  hence  it  was  said  by  Willes  J.,  in  Locl'yer  v. 
OJley,  1  T.  B.  260,  that  if  the  party  receives  a  mortal  wound 
within  the  period,  and  dies  after  it  has  expired,  the  insurer 
is  discharged.  The  risk  incurred  is  the  termination  of  the 
life  insured,  and  this  is  to  be  shown  by  the  party  averring 
it.  The  time  of  its  occurrence  is  a  fact  to  be  found  by  the 
juiy.  It  must  sometimes  necessarily  rest  upon  presumption, 
and  the  general  rule  here  is,  that  any  one  who  has  not  been 


3G6  rRESUMPTION   OF   STJEVIYOKSniP. 

licard  of  for  the  space  of  seven  years,  may,  for  all  legal  and 
equitable  puri)o.ses,  1)C  presumed  to  be  dead.  Tilly  v.  Tilly y 
2  Bland,  445.  Questions  of  great  difficulty  and  embaiTass- 
ment  have  sometimes  grown  out  of  the  necessity  of  deter- 
mininir  who  was  the  survivor,  where  two  or  more  have 
perished  by  a  common  accident,  as  a  shipwreck  ;  and  in  their 
settlement  the  civil  law  and  the  Code  Napoleon  have 
adopted  presumptions  derived  from  physiological  principles, 
such  as  the  relative  ages,  health,  and  physical  condition  of 
the  parties,  as  affording  indications  of  the  amount  of  endur- 
ance eacli  could  suffer  before  dying,  and  hence  the  relative 
length  of  time  each  would  be  able  to  hold  out.  The  com- 
mon law  has  rejected  these  refined  distinctions,  and  adopted 
the  principle,  that  where  two  or  more  have  perished  by  a 
common  disaster,  and  there  is  no  evidence  as  to  which  sur- 
vived the  other,  th'ey  shall  be  presumed  to  have  died  to- 
gether ;  but  if  there  is  evidence  tending  to  show  which  died 
first,  that  will  control,  and  in  case  of  great  inequality  in  age, 
health,  and  physical  condition,  it  may  be  given  in  evidence, 
and  aid  in  the  conclusion. 

§  623.  Where  a  policy  provides  for  yearly  payment  of 
premiums,  there  is  generally  a  condition  annexed,  that  in 
case  of  the  non-payment  of  the  premium  at  the  specified 
time,  or  within  a  certain  number  of  days  thereafter,  the 
policy  shall  cease  and  be  void.  In  such  a  case  a  neglect  to 
pay  at  the  time  specified  would  result  in  the  termination  of 
the  contract  of  insurance.  But  a  policy  forfeited  by  non- 
compliance of  the  assured  witli  its  precise  terms,  may  be  re- 
vived by  an  imconditional  acceptance  on  the  part  of  the  in- 
surers of  their  premiums.  Wing  v.  Harvey,  2T  Eng.  L.  and 
Eq.  140. 

QUESTIONS. 

"WJbat  is  life  insurance  ?  What  may  the  engagement  be  ?  What  may 
the  consideration  be  ?  What  are  the  objects  songht  by  the  insurance  ? 
What  does  the  law  require  to  render  legal  the  insurance  ?  Has  any  one 
a  right  to  insure  his  own  life  ?    What  may  a  creditor  insure,  and  why, 


^VIIAT  IS  A  BALE  OR  EXCHANGE.  367 

and  to  what  extent  ?  What  is  often  done  at  the  time  of  the  creation  of 
the  debt?  What  instances  in  wliich  the  hfe  of  others  cannot  be  in- 
sured? What  kind  of  interest  must  it  be  to  justify  insurance?  When 
tan  a  child  insure  its  father's  life  ?  When  a  single  woman  that  of  her 
brother  ?  When,  how,  and  under  what,  a  married  woman  that  of  her 
husband  ?  And  what,  and  in  exclusion  of  whom,  entitled  to  on  his 
death?  What  is  the  policy  issued  upon  the  strength  of ?  What  the 
questions  to  wliich  answers  are  the  most  commonly  required  ?  What 
the  result,  if  the  statements  made  are  incorporated  into  the  policy  or 
made  a  part  of  it  ?  WTiat  if  not  incorporated  ?  If  representations,  how 
must  they  be  made  to  avoid  the  policy  ?  When  will  they  avoid  it  if 
immaterial  and  fraudulently  made  ?  What  is  the  rule  where  there  is  no 
warranty,  representation,  or  fraud  ?  Wliat  should  the  insurer  do  to  ob- 
tain knowledge  ?  What  the  duty  of  the  assured  as  to  relevant  ques- 
tions ?  How  must  the  answer  be  ?  Under  what  circumstances  may  a 
policy  be  rendered  void  where  no  specific  questions  are  asked  ?  Where 
there  is  no  warranty  or  condition,  what  risks  does  the  insurer  take  ?  In 
regard  to  what  does  the  insurer  generally  rely  upon  the  insured  ?  What 
does  the  insured's  application  bind  him  to  disclose  ?  Wlio  takes  the  risk 
of  a  fact  being  immaterial  ?  WTio  decides  on  the  materiality  of  facts  ? 
When  has  the  insured  done  all  the  law  requires  of  him  ?  What  if  he 
chooses  to  speculate  ?  What  instances  in  illustration  ?  Is  dispepsia  a 
disease  tending  to  shorten  life  ?  What  conditions  are  now  frequently 
contained  in  policies?  If  suicide  results  from  insanity,  is  it  a  violation 
of  the  condition  ?  Are  life  policies  assignable  ?  How  are  they  now 
regarded?  WTiat  the  assignee  entitled  to  recover?  Must  he  have  an 
insurable  interest  ?  Is  a  life  policy  a  contract  of  indemnity  or  one  to  be 
executed  according  to  its  terms  ?  What  instances  in  illustration  ?  When 
does  risk  commence  ?  When  terminate  ?  By  whom  latter  to  be  shown  ? 
What  a  question  for  ?  When  presumed  dead  ?  What  rule  as  to  presump- 
tion of  survivorship  ?  How  may  policy  be  forfeited,  and  how  forfeiture 
waived  ? 


CHAPTER  IV. 

CONTRACT  OF  TRANSFER  OF  PROPERTY. 
FIKST. BY  SALE. 

§  G24.  A  sale,  or  an  exchange,  is  a  transfer  of  title  in  the 
tiling  sold  or  exchanged  to  another,  in  consideration  of  some 
price  or  recompense  received  from  the  pm*chaser.    This  will 


368  CHAEACTEK  OF  THINa  TO  BE  BOLD. 

sufficiently  define  the  contract  of  sale,  although  not  all  the 
possible  modes  by  which  title  can  be  transferred  from  one 
to  another.  One  mode  is  by  operation  of  law  ;  as,  where 
personal  property  is  wrongfully  converted  by  one  to  his  own 
use,  and  the  owner  brings  an  action  against  him,  and  re- 
covers judgment  for  its  value.  Either  the  perfecting  of  the 
judgment,  or  the  satisfaction  of  the  execution  issued  there- 
on, (and  which  of  the  two  is  still  an  open  question,)  operates 
a  transfer  of  title  in  the  property  converted  to  the  judg- 
ment or  execution  debtor.  "With  the  view  of  including  this 
and  all  other  possible  modes  of  transferring  title  in  prop- 
erty for  a  consideration,  sale  has  been  defined  to  be  "  a 
transmutation  of  property  from  one  man  to  another  in  con- 
sideration of  a  money  price."  Barter  is  the  exchanging  of 
one  commodity  for  another.  It  is  older  than  sale,  prevailing 
in  the  infancy  of  society.  The  general  principles  that  regu- 
late both  are  essentially  the  same. 

PART   I. 

THING  TO  BE  SOLD. 
I 

§  625.  Parties  competent  to  contract  are  necessary  here 
as  in  all  other  kinds  of  contracts.  A  new  element  is  here 
introduced,  viz.,  the  thing  which  is  the  subject  of  sale. 
This  is  essential  to  this  species  of  contract,  as  the  essence  of 
it  is  found  in  the  transfer  of  title.  The  thing  sold  must 
have  either  an  actual  or  a  potential  existence,  at  the  time  of 
the  sale.  It  may  be  in  the  hands  of  an  agent,  or  in  the 
course  of  consignment  on  its  way  to  the  consignee,  and  a 
sale  will  be  valid ;  but  if  one  sells  to  another  a  piece  of 
property,  both  parties  believing  it  to  be  in  existence  at  the 
time,  and  it  turns  out  that  they  were  mutually  mistaken, 
the  article  having  been  previously  destroyed,  no  contract 
of  sale  can  arise.  A  horse  is  sold  which  both  parties  believe 
to  be  alive,  but  which  was  in  fact  dead ;  the  contract  is 
void. 


EFFECT  OF  TOTAL  AKD   PAETIAI.  FAILTJKE  OF  TITLE.     869 

§  626.  Although  there  is  no  difficulty  where  the  thing 
Bought  to  be  sold  is  totally  destroyed,  or  never  had  an  exist- 
ence ;  yet  much  contrariety  of  opinion  has  grown  out  of  a 
partial  destruction,  or  non-existence  of  the  thing  sold,  in  its 
effect  upon  the  sale.  An  executory  agreement  is  entered 
into  for  the  sale  of  an  estate  consisting  of  several  lots  of 
land,  and  the  title  to  a  part  of  them  fails.  AVhat  are  the 
rights  and  duties  of  the  purchaser  ?  Can  he  abandon  the 
purchase,  or  be  compelled  to  perfect  it?  The  cases  of 
OJley  V.  Shallovss,  4  Madd.  Chan.  jRep.  227,  and  Judson 
V.  WasSy  11  John.  525,  hold  that  in  such  case  the  pur- 
chaser may  abandon  his  purchase ;  but  a  very  judicious 
modification  is  laid  down  by  Lord  Brougham  in  Casamajor 
V.  Strode,  1  Cooper's  Sel.  Ca.  510,  to  the  effect  that  the  pur- 
chaser, in  such  case,  was  not  to  be  let  off  from  his  contract 
for  one  lot,  on  the  ground  that  the  title  to  the  other  was 
bad,  unless  it  appeared  from  the  circumstances  that  the  two 
lots  were  so  connected  that  the  purchaser  would  not  have 
bought,  except  in  the  expectation  of  possessing  both  lots. 
Where  a  purchase  has  been  perfected  and  no  fraud  has  en- 
tered into  the  transaction,  the  pm-chaser  being  in  possession, 
he  cannot  set  up  a  partial  failure  of  title  as  a  defence 
against  securities  for  the  purchase  money,  as  he  may  resort 
to  his  remedy  at  law  on  his  covenants  of  warranty.  But 
where  there  is  a  total  failure  of  title,  and  no  possession  given 
upon  the  sale,  or  where,  after  the  giving  of  possession,  there 
occurs  an  eviction,  the  purchaser  has  an  undoubted  right, 
in  the  absence  of  all  fraud,  to  rescind  the  purchase.  This 
comes  under  the  principle  first  laid  down.  There  has  been 
in  reality  nothing  sold,  and  no  rights  of  any  possible  value 
transferred  lo  the  purchaser.  But  the  case  is  varied  where 
possession  is  given  and  maintained  ;  and  hence  in  sales  of 
chattels,  in  cases  free  from  fraud,  the  purchaser  cannot  resist 
payment  while  the  contract  continues  open,  and  he  retains 
possession.  In  the  jurisprudence  of  New  York  the  dam- 
ages sustained  on  a  partial  failure  of  title  to  that  which 
24 


370  EXISTENCE  OF  SUBJECT  OF  SALE. 

the  vendor  has  sold  under  a  warranty,  may  l3C  set  up  by  way 
of  recoupment  by  the  purchaser,  to  an  action  brought  to  re- 
cover the  price.  But  the  question  still  remains  as  to  the 
purchaser's  right  where  the  main  inducement  to  the  pur- 
chase has  failed  ;  and  here  the  rule  laid  down  by  Chancellor 
Kent,  in  2  Kenfs  Comm.  476,  as  collected  from  Pothier, 
Lord  Erskine,  and  Lord  Kenyon,  is  undoubtedly  the  correct 
one,  viz. :  "Jf  the  defect  of  title,  whether  of  lands  or  chat- 
tels, be  so  great  as  to  render  the  thing  sold  unfit  for  the  use 
intended,  and  not  within  the  inducement  to  the  purchase, 
the  purchaser  ought  not  to  be  held  to  the  contract,  but  be 
left  at  liberty  to  rescind  it  altogether." 

§  627.  Another  question  that  has  been  difierently  decided 
by  the  courts,  relates  to  the  legality  of  the  sale  when  the 
thing  sold  is  not  at  the  time  owned  by  the  vendor,  although 
it  may  be  in  existence,  and  the  property  of  another.  Lord 
Tenterden  held  in  Bryan  v.  Lewis,  Ryan  <&  Moody,  386, 
that  if  goods  be  sold  deliverable  at  a  future  day,  and  the 
vendor  neither  has  the  goods  nor  any  contract  for  them, 
nor  any  reasonable  expectation  of  receiving  them  by  con- 
signment, but  intends  to  go  into  the  market  and  buy  them, 
it  was  no  valid  contract,  being  merely  a  wager  on  the  price 
of  the  commodity.  This  doctrine,  however,  was  completely 
overruled  in  HibhleioMle  v.  IfcMorine,  5  Mee.  <&  Wels.  462. 
A  statute  was  formerly  in  force  in  the  State  of  New  York, 
to  prevent  stock-jobbing,  which  affirmed  the  doctrine  of 
Bryan  v.  Lewis,  but  that  has  since  been  repealed,  so  that 
the  contrary  doctrine  now  prevails. 

§  628.  The  subject  of  sale  need  not  have  an  actual  exist- 
ence. It  is  sufficient  if  it  exist  potentially.  It  is  competent 
to  sell  the  expected  produce  of  that  which  has  an  actual 
existence.  Tlie  grain  expected  to  grow  on  a  field  owned  by 
the  vendor,  the  milk  that  a  cow  may  yield  during  the  coming 
year,  the  future  young  of  sheep  owned  by  the  vendor,  or 
the  future  wool  that  may  grow  uj^on  them,  are  all  subjects 
of  sale.    Even  an  expectation  founded  upon  mere  chance,  as 


PKICE  AS  AN  ELEMENT  OF  SALE.  371 

the  product  of  a  net  to  be  cast  by  fishermen,  may  be  the  sub- 
ject of  sale.  But  a  mere  possibility  or  contingency,  depend- 
ing upon  nothing  in  actual  existence,  cannot  be  sold.  In- 
stances of  this  would  be,  the  future  wool  of  sheep  which  the 
vendor  did  not  own,  the  mere  expectancy  of  succeeding  to 
an  estate ;  although  if  such  expectancy  is  founded  upon  a 
right,  as  where  a  reversionary  interest  is  founded  on  a  settle- 
ment or  entailment,  it  may  be  the  subject  of  sale. 

QUESTIONS. 
"What  is  a  sale  or  exchange  ?  Is  there  any  mode  of  transferring  title 
by  operation  of  law  ?  Under  what  circumstances  may  this  be  done  ? 
How,  in  reference  to  this,  may  a  pale  be  defined?  "What  is  barter? 
"Which  is  the  older,  sale  or  exchange?  Any  difference  in  the  general 
principles  applying  to  each  ?  "What  new  element  is  introduced  into  the 
contract  of  sale  ?  "What  is  the  essence  of  this  contract  found  in  ?  "What 
kind  of  existence  must  the  thing  sold  have  ?  How  if  in  the  hands  of  an 
agent,  or  in  the  course  of  consignment  ?  How  if  article  sold  be  at  the 
time  destroyed  ?  "What  is  the  rule  where  several  lots  are  purchased,  and 
the  title  to  some  of  them  fails  ?  "What  is  a  purchaser  in  possession  pre- 
cluded from  doing  when  action  is  brought  against  him  for  purchase 
money  ?  How,  where  there  is  total  failure  of  title  and  no  possession  ? 
How,  in  case  of  purchase  of  personal  chattels  when  he  remains  in  pos- 
session ?  "What  is  the  remedy  in  New  York  under  recoupment  ?  "What 
the  rule  where  main  inducement  to  purchase  has  failed  in  consequence 
of  defect  in  title  ?  Suppose  the  thing  sold  in  existence,  and  not  at  the 
time  owned  by  the  vendor,  can  he  give  title  by  a  sale  ?  Has  there  been 
any  conflict  and  what,  in  the  rule  on  this  subject  ?  "What,  besides  an  ac- 
tual existence  of  the  thing  sold  will  enable  an  owner  to  sell  ?  "What  ca* 
he  sell  the  expected  produce  of?  What  cases  put  in  illustration  ?  Can 
a  mere  possibility  be  sold  ?  Can  an  expectation  founded  upon  chance  ? 
"When  is  a  reversionary  interest  the  subject  of  sale  ? 

PART  II. 

THE  PRICE  OR  EQITIVALEXT. 

§  629."  The  priee  is  the  equivalent  rendered  by  the  pur- 
chaser for  the  thing  sold.  It  is  essential  to  constitute  a  con- 
tract of  sale,  as  without  it  the  transfer  would  be  a  mere 
gift.    In  a  salCf  as  contradistinguished  from  exchange,  it 


372  PEIOE  AS  AN  ELEMENT  OF  SALE. 

must  bo  money,  and  a  certain  definite  sum,  or  susceptible 
of  calculation.  The  inilo  is,  that  the  contract  should  either 
name  the  price,  or  the  means  by  which  it  may  be  arrived 
at,  or  leave  open  the  means  of  ascertainment.  If  specified 
in  the  contract,  that,  in  the  absence  of  fraud  or  mistake,  is 
binding  upon  the  parties.  The  contract  may  provide  ex- 
press means,  as  that  a  third  person,  naming  him,  shall  afiix 
the  price,  adopting  in  advance  whatever  sum  he  may  name. 
In  such  case  the  contract  remains  incomplete  until  the  price 
is  affixbd  according  to  its  terms,  and  if  such  third  person 
dies,  or  refuses  to  act,  all  binding  obligation  ceases.  The  only 
means  provided  for  ascertaining  an  essential  element  have 
utterly  failed,  and  the  contract  itself  must  necessarily  ter- 
minate. So  also  the  parties  may  provide  that  the  price  shall 
be  the  same  as  that  charged  by  others  for  a  similar  article, 
or  that  it  shall  be  its  fair  market  value,  or  what  it  is  rea- 
sonably worth ;  or  there  may  be  no  provision  in  reference  to 
it,  and  then,  if  the  sale  be  perfected  by  delivery,  it  will  be 
construed  as  being  what  the  article  is  worth  in  the  market, 
the  sum  in  all  these  cases  to  be  ascertained  by  a  jury. 

§  630.  The  common  law  allows  parties  to  make  their 
own  contracts,  and  aflax  their  own  prices  to  ai^ticles  sold.  It 
will  enforce  the  contract,  if  legal,  however  inadequate  the 
price,  provided  every  part  of  the  agreement  is  entered  into 
in  good  faith,  and  in  the  absence  of  all  fraud  or  mistake. 
If  the  price  agreed  upon  be  far  below  the  market  value,  it 
may  be  claimed  as  a  badge  of  fraud,  and  with  the  aid  of 
other  circumstances  may  make  out  a  sufficient  defence.  It 
may,  if  grossly  inadequate,  constitute  a  sufficient  reason 
why  a  court  of  equity  will  refuse  to  decree  a  specific  per- 
formance of  a  contract.  It  must  be  a  sum  agreed  upon  as 
the  actual  price  or  equivalent  for  the  thing  sold,  and  must 
not  be  a  real  loan  of  money  under  the  name  of  a  sale. 

§  631.  The  effect  of  a  contract  of  sale  perfected,  is  to 
transfer  the  title  to  the  goods  to  the  vendee  and  the  price  to 
the  vendor.    If  the  price  is  not  immediately  paid,  a  debt  is 


ENTESE  Am)  SEVEKABLE  CONTKACTS.  373 

created,  the  vendor  standing  in  the  relation  of  creditor  and 
the  vendee  as  debtor.  If  no  such  debt  is  created  on  the  sale 
by  the  giving  of  credit,  the  vendee  or  purchaser,  cannot  en- 
title himself  to  the  goods  without  paying  or  tendering  the 
full  price.  But  if  a  credit  forms  a  part  of  the  contract,  the 
vendee  may  immediately  demand  possession  of  the  goods. 
By  the  terms  of  a  sale,  the  price  is  to  be  paid  in  the  notes 
of  a  third  person,  whom  both  parties  suppose  to  be  solvent. 
Before  the  notes  are  executed  he  becomes  insolvent.  Can 
the  vendee,  on  tendering  the  notes,  entitle  hhnsclf  to  the 
goods  ?  He  cannot.  Benedict  v.  Field,  16  New  YorTc  Bcp. 
595. 

§  632.  The  rights  and  remedies  of  the  parties  depend 
much  upon  whether  the  contract  be  entire  or  severalle. 
Oneness  or  separateness  of  price  is  the  usual  test  of  an  entire 
or  severable  contract  of  sale.  If  a  single  sum  is  agreed 
upon  as  one  price  for  several  commodities,  it  is  obvious  the 
contract  furnishes  no  means  of  apportioning  that  sum  among 
the  different  commodities.  This  makes  it  an  entire  contract, 
and  renders  it  necessary  that  one  party  should  perform,  or 
offer  to  perform,  all  his  part  of  it,  before  he  can  call  upon 
the  other.  The  sale  either  of  one  certain  thing,  or  of  seve- 
ral certain  things  for  one  certain  price,  constitutes  an  entire 
contract.  In  one  that  is  severable  the  consideration,  by  the 
terms  employed,  may  be  apportioned  in  such  a  manner  as 
to  conform  to  the  unascertained  consideration  on  the  other 
side.  A  party  agrees  to  buy  as  much  grain  as  corresponds 
to  a  sample,  at  a  certain  price  per  bushel.  Here  is  no  entire 
quantity,  and  no  entire  price,  but  only  a  certain  relation  be- 
tween the  two  ;  and  that  relation  furnishes  the  means  of  as- 
certaining one  side  when  the  other  is  completed. 

§  633.  Tliere  is  a  species  of  severable  contract  differing 
from  that  last  mentioned.  That  was  indefinite,  undeter- 
mined on  both  sides  until  the  completion  of  one,  and  that 
furnished  the  means  of  completing  the  other.  In  this  spe- 
cies, one  side  is  definite,  limited,  a  certain  number  or  quan- 


374  EXECUTOKY  CONTEACT  OF  BALE. 

tity  of  tilings  being  on  one  side,  and  made  the  subject  of 
sale  or  purchase,  the  price  being  fixed  cither  by  a  certain 
rate  agreed  upon,  or  by  the  single  article  or  measure,  or 
by  a  particular  valuation  to  each  thing,  if  the  things  be  of 
difi\;rent  kinds.  A  certain  farm,  and  dead  stock,  and  grow- 
ing wheat  arc  all  sold  together  in  one  contract,  but  a  sepa- 
rate price  is  affixed  to  each.  Tliis  contract  is  only  entire  as 
to  each  item.  Tlie  whole  contract  is  in  fact  severable  into 
three  contracts,  and  a  failure  to  comply  in  one  particular 
does  not  invalidate  the  sale  or  give  the  vendee  a  right  to 
reject  the  whole  contract.  Mayjield  v.  Wadsley^  3  Barn. 
(&  Cress.  357.  In  this  manner  it  is  competent  for  the  par- 
ties, by  agreement  with  each  other,  so  to  apportion  the  con- 
sideration to  the  subject-matters  of  the  sale,  as  to  transform 
what  would  otherwise  be  an  entire  contract  into  a  severable 
one,  and  the  consent,  so  to  transform,  will  be  implied  in  all 
eases  where  an  act  is  done  which  is  inconsistent  with  the 
recognition  of  the  entirety  of  the  contract.  A  orders  three 
parcels  of  goods  for  a  certain  price.  He  may  refuse  to  ac- 
cept of  one  without  the  others.  But  if  one  of  them  be  sent 
and  he  accept  it,  he  cannot  refuse  the  second  merely  because 
the  third  is  not  sent ;  since  by  his  acceptance  of  one,  he  has 
consented  to  treat  the  contract  as  several  for  each  of  the 
parcels.     Champio7i  v.  Sho7%  1  CamiJ.  53. 

§  634.  Either  the  price,  or  the  thing  to  be  sold,  one  or  both, 
may  be  thrown  into  the  future,  and  thus  be  made  executory 
upon  one  or  both  sides.  A  merchant  contracts  to  sell  all 
the  goods  of  a  particular  description  which  his  foreign  agent 
may  ship  in  a  certain  vessel,  or  within  a  certain  time.  This 
is  an  executory  contract  of  sale.  Boyd  v.  Skiffldn,  2 
Camp.  326. 

§  635.  Another  kind  of  executory  contract  of  sale,  or 
rather  an  agreement  to  make  a  sale,  occurs  when  the  article 
purchased  has  no  existence  at  the  time  of  the  contract,  but 
is  yet  to  be  manufactured  by  the  vendor.  This  strictly  is 
not  a  contract  of  sale,  as  no  title  passes  to  the  pm'chaser 


EXECUTOKY   AND   CONDITIONAL   SALES.  375 

until  the  completion  of  the  thing,  and  its  actnal  delivery  or 
appropriation  by  the  purchaser,  or  its  being  set  apart  for, 
and  accepted  by  him.  It  follows  as  a  consequence  of  this, 
that  the  vendor,  or  manufacturer,  is  under  no  obligation  to 
deliver  the  article  originally  intended,  but  if  he  chooses  he 
may  dispose  of  that,  and  furnish  another  that  will  comply 
with  his  contract.  The  agreement  sometimes  provides  that 
the  work  shall  be  done  in  successive  stages,  and  that  the 
price  shall  be  apportioned  to  each  stage,  and  be  paid  as  each 
becomes  completed.  A  contracts  to  build  for  13,  a  vessel 
of  certain  specified  dimensions,  and  deliver  it  to  him  com- 
plete by  a  certain  day  for  the  price  of  $5,000.  Of  this  sum 
$3,000  is  to  be  paid  at  different  stages  of  the  work,  and 
$2,000,  when  it  is  completed  and  delivered.  B's  agent  is  to 
inspect  and  approve  as  the  work  progresses.  Tlic  important 
question  here  is,  whether  the  title  to  the  difierent  parts  of 
the  vessel,  as  they  arc  successively  completed  and  paid  for, 
passes  to,  and  vests  in,  the  purchaser,  so  that  in  case  of 
destniction,  the  loss  would  be  his  ;  or  is  there  no  transfer 
and  vesting  of  title  imtil  the  comjjlction  and  delivery  of  the 
entire  vessel  ?  The  former  is  the  doctrine  settled  in  the 
English  law.  Clar'k  v.  Spcncei\  4  Adol.  cfc  Ellis.  448.  The 
latter  is  that  prevailing  at  present  in  this  country.  Andrew 
V.  Durante  1  Kern.  35.  Also  same  case,  18  New  York 
Rep.  49G. 

§  G36.  If  the  goods  which  are  the  subject  of  sale  are,  at 
the  time,  existing,  the  vendee,  by  advancing  the  price,  may 
procure  an  immediate  transfer  of  the  title  to  himself,  and 
thus  become  entitled  to  recover  them  of  the  vendor,  or  of 
any  other  person  who  may  have  come  into  possession  of  them. 
But  the  goods  "svill  remain  at  the  nsk  and  hazard  of  the 
vendor,  so  long  as  any  thing  remains  to  be  done  by  him 
which  is  either  required  by  the  contract,  or  by  the  custom 
of  trade. 

§  G37.  There  arc  also  conditional  sales,  in  which  the  fact 
of  sale,  or  the  payment  of  the  price,  is  made  dependent 


37G  CIIARACTOR   OF   CONDITIONAL   BALES. 

upon  a  coiulltion.  Tlic  difBcult  fjucstion  to  determine  here 
is,  whether  the  title  has  passed  so  as  to  vest  in  the  vendee 
or  not.  K  the  condition  be  precedent,  no  title  passes  until 
its  performance.  An  agreement  is  made  to  sell  150  tons  of 
pig-iron,  of  a  certain  quality,  "  on  board  the  ship  L,"  which 
was  then  at  sea.  This  was  held  to  be  conditioned  upon  the 
iron's  arrival  in  port,  and  no  sale  until  its  arrival.  Shilds  v. 
Pettie,  4  Comst.  122.  Sales  are  not  unfrequently  made  on 
trials  and  when  any  particular  time  is  specified  within  which 
the  trial  is  to  be  had,  the  article  must  be  returned  within 
that  time,  or  the  contract  becomes  binding.  But  the  party 
taking  on  trial  is  entitled  to  the  whole  of  the  time  specified 
to  make  up  his  mind  ;  and  within  that  period  he  may  change 
it  as  many  times  as  he  pleases,  and  even  communicate  such 
changes  to  the  other  party,  without  in  the  least  impairing 
his  right  to  come  to  such  ultimate  conclusion  as  he  may, 
under  all  the  circumstances,  elect.  He  must  not,  however, 
return  the  goods,  or  allow  the  matters  in  negotiation  to  be 
closed. 

§  638.  It  is  competent  to  imply  conditions  from  the  cir- 
cumstances of  the  case,  where  none  are  expressly  attached. 
Certain  rules  of  which  the  vendee  has  notice  are  posted  up 
at  the  place  where  goods  are  sold,  stating  the  conditions  of 
sale.  These  will  be  implied  in  every  sale  made  there,  al- 
though no  express  reference  be  made  to  them  in  the  contract 
of  sale.   Byicater  v.  Richardson^  3  Nei).  &  Man.  TiS. 

§  639.  If  the  vendor  doubts  the  ability  of  the  vendee  to 
pay  the  stipulated  price,  the  contract  of  sale  may  be  condi- 
tioned upon  such  payment.  The  goods  may  be  delivered 
to  the  purchaser,  and  the  right  he  acquires  is  that  of  using 
them  until  the  time  of  payment  arrives,  and  then  if  he  makes 
default  in  that,  his  right  ceases.  Such  a  conditional  pur- 
chaser acquires  no  right  which  can  be  the  subject  of  levy 
and  sale  under  an  execution  against  him.  Herring  v.  II02)- 
pacJc,  15  JVew  TorJc  Rep.  409. 

§  640.  The  parties  may,  if  they  choose,  waive  all  condi- 


CONDITIONAL  SALES.  377 

tions  that  are  attached  to  a  sale.  Goods  are  sold  conditioned 
to  be  paid  for  on  delivery  by  notes,  and  the  goods  are  deliv- 
ered without  the  notes  being  given  or  demanded.  A  pre- 
sumption arises  that  the  condition  is  waived,  and  a  complete 
title,  therefore,  vests  in  the  purchaser.  But  this  rests  en- 
tirely in  presumption.  It  is  only  lyrima  facie.,  and  it  is 
competent  to  introduce  rebutting  proof  of  the  acts  and 
declarations  of  the  parties  at  the  time,  and  which  go  to  show 
a  different  intention.  "Where  the  delivery  is  complete,  the 
establishment  of  the  condition  rests  upon  the  vendor,  and 
in  such  case,  whether  conditional  or  not  as  between  the  par- 
ties, a  hona  fide  purchaser  from  the  vendee  will  get  a  good 
title.    Smith  v.  Lynes.,  1  Seld.  41. 

QUESTIONS. 

"WTiat  is  price  ?  To  what  is  it  essential,  and  -why  ?  WLat  is  it  in 
case  of  sale  ?  "What  must  the  contract  do  in  relation  to  price  ?  What 
effect  of  specifying  it  in  the  contract  ?  How  may  contract  provide  for 
price  in  the  future  ?  What  will  create  a  failure  and  annul  the  contract  ? 
"What  if  no  jirovision  bo  made  in  reference  to  the  price  ?  Suppose  the 
price  is  inadequate,  what  is  the  rule  ?  "What  may  it  be  claimed  to  es- 
tablish ?  If  grossly  inadequate,  what  is  the  rule  in  equity  ?  "What  the 
rule  as  to  its  being  actual  ?  What  is  the  effect  of  a  contract  of  sale  per- 
fected ?  What  if  the  price  is  not  immediately  paid  ?  If  debt  be  created, 
what  must  purchaser  do  to  entitle  himself  to  goods  ?  What  if  credit 
form  a  part  of  the  contract?  What  if  notes  of  a  third  person  are  to  be 
given,  and  the  maker  becomes  insolvent,  can  vendee,  by  tendering  notes, 
entitle  himself  to  the  goods?  What  is  the  test  of  entire  or  severable 
contract  of  sale  ?  What  constitutes  an  entire  contract  ?  What  one  that 
is  severable  ?  What  illustration  ?  What  other  species  of  severable  con- 
tract is  there  ?  What  illustration  ?  What  may  parties  do  in  case  of  en- 
tiro  contract  ?  What  implication  may  arise,  and  from  what  ?  Wliat 
illustration  ?  When  may  a  contract  of  sale  be  rendered  executory  ?  And 
how  may  it  be  done?  What  illustration?  What  is  another  species  of 
executory  sale,  or  agreement  to  make  a  sale?  Does  any  title  pass  by 
such  agreement  ?  Must  the  manufacturer  furnish  the  article  originally 
intended  ?  Suppose  work  is  to  be  done  in  successive  stages,  as  payments 
are  made,  what  effect  has  this  in  transferring  title  ?  What  illustration  ? 
What  tho  dilTcrenco  between  the  English  and  American  rule  ?  IIow  may 
purchaser  procure  an  immediate  transfer  of  tho  title  to  himscK  ?    How 


378         THE  ASSENT  KEQtJIEED  TO  COMPLETE  CONTEACT. 

long  will  goods  rciflain  at  risk  and  hazard  of  vendor  ?  When  are  sales 
conditional  ?  What  is  the  difficult  question  here  ?  What  if  condition 
bo  precedent  ?  What  illustration  ?  What  the  rule  when  sales  are  made 
on  trial  ?  When  must  article  be  returned  ?  How  long  may  vendee  take 
to  determine  ?  May  conditions  ever  bo  implied  ?  What  illustration  ? 
What  if  sale  be  conditioned  upon  payment  ?  What  right  does  purchaser 
then  acquire  ?  Can  there  be  waiver  of  condition  ?  What  illustration  ? 
Can  presumption  be  rebutted  ?  How  ?  How  is  it  where  delivery  is  com- 
plete ?    How  in  such  case  is  it  with  'bona  fide  purchaser  from  vendee  ? 


PART  III. 

THE   ASSENT  TO   THE  CONTEACT. 

§  641.  This  contract,  like  every  other,  requires  the  assent 
of  both  parties  to  be  freely  and  intelligently  given.  The  prop- 
osition may  proceed  from  either  one,  and  be  withdrawn  at 
any  time  before  its  acceptance.  Thus  a  proposition  is  made 
by  A  to  B  to  exchange  horses  with  him,  and  to  give  him  a 
specific  sum  as  the  difierence.  B  had  the  privilege  of  reserv- 
ing his  determination  until  a  certain  day.  Before  the  arrival 
of  that  day,  A  gives  notice  that  he  revokes  his  proposition. 
The  contract  of  exchange  of  horses  is  at  an  end.  Eskridge 
V.  Glover^  5  Stew.  S  Port.  264.  The  acceptance  of  a  prop- 
osition may  always  be  implied,  where,  by  the  terms  of  the 
oflfer  it  is  incumbent  on  the  other  party  to  express  his  dissent, 
or  where  his  acts  afibrd  an  unequivocal  presumption  of  as- 
sent. 

§  642.  A  compliance  with  a  proposition  made  has  the 
same  effect  as  an  acceptance.  An  order  for  certain  descrip- 
tions of  merchandise  is  sent  by  one  merchant  to  another. 
The  one  to  whom  it  is  sent,  instead  of  formally  accepting 
the  proposition,  complies  with  it,  and  sends  the  goods  agree- 
able to  the  order.  If  these  latter  are  forwarded  before  any 
telegraphic  dispatch  countermanding  the  order,  or  any  re- 
traction of  it  is  received,  the  contract  must  be  considered  as 
completed,  and  the  goods  are  the  property  of  the  party  who 
orders  them.    So  also  if  forwarded  after  the  retraction  is 


ASSENT  NECESSARY  TO  DIVEST  TITLE.  379 

written,  but  before  tlie  receipt  of  it,  the  result  is  still  the 
same.  To  annul  the  contract,  or  rather  to  prevent  the  form- 
ing of  one,  the  notice  of  revocation  of  the  order  must  be 
brought  home  to  the  party  upon  whom  it  is  made,  before 
there  is  any  compliance  with  it  by  forwarding  the  goods. 
If  the  proposition  is  accompanied  by  any  conditions  or 
limitations,  the  acceptance,  or  comj)liance,  must  correspond 
precisely  to  it,  for  any  variation  will  have  the  eflfect  of  a 
new  proposition,  which  will  itself  require  acceptance  by  the 
other  party, 

§  6-13.  Tlie  rule  is  inflexible  at  common  law  which  re- 
quires the  assent  of  the  owner  of  property  either  express  or 
implied,  to  legalize  any  disposition  that  may  be  made  of  it. 
His  right,  title,  and  interest  in  the  property  he  owns,  can 
never  be  divested,  except  by  his  own  assent,  fully  and  freely 
given,  or  by  due  process  of  law  to  which  his  assent  is  im- 
pliedly given.  This  principle  in  our  jurisprudence  is  now 
very  fully  settled.  In  England  there  are  markets  overt, 
which  arc  held  in  certain  places  on  certain  days  of  the  week, 
at  which  the  sale  and  delivery  of  property  will  transfer  a 
good  title.  Tlie  owner  of  lost  goods,  if  he  desires  to  protect 
himself,  must  resort  there  and  give  notice  of  his  o\\'nership, 
forbidding  the  sale,  or  he  is  bound  by  it.  Li  this  country 
there  are  no  markets  overt,  and  hence  no  opportunity 
afforded  the  owner  to  assert  his  claim.  Tlie  law  will  not 
here  allow  any  property  to  be  acquired  by  another  in  goods 
or  chattels  without  the  assent  of  the  owner.  Several  cases 
of  great  hardship  have  occurred,  in  which  property  has  been 
disposed  of  to  hona  fide,  purchasers  for  its  full  value,  who 
have  nevertheless  been  held  responsible  to  the  true  owner. 
Tlie  sale  of  stolen  goods  by  tlie  thief,  or  any  one  deriving  title 
through  him,  can,  in  this  country,  in  no  case,  be  valid.  Even 
a  hona  fide  purchaser  of  such  goods,  who  subsequently, 
without  any  notice  that  they  are  stolen,  sells  them  as  liis 
own,  is  liable  to  tlie  owner,  in  an  action  of  trover,  for  their 
full  value.    His  purchase  and  sale  of  them  is  considered  a 


380  BALES  AT  Wnicn  TITLE  PASSES. 

conversion.  Goods  are  stolen  from  tlic  plaintiff  in  New 
York,  forwarded  to  Baltimore,  and  there  sold  at  auction. 
Tlie  proceeds,  without  notice,  had  been  paid  over  to  the  thief 
in  the  ordinary  course  of  business.  And  yet  the  auctioneers 
were  held  liable  to  the  owner  for  the  value  of  the  goods. 
Hoffman  v.  Carow,  22  Wend.  285.  So,  also,  where  goods 
were  shipped  at  New  Orleans  under  a  bill  of  lading  to  de- 
liver to  consignees  at  New  York ;  and  at  Norfolk,  where  the 
vessel  had  arrived  in  distress,  a  part  of  the  goods  were  sold, 
and  the  rest  shipped  on  another  vessel,  a  bill  of  lading  being 
taken  for  their  delivery  to  the  master's  order  in  New  York, 
by  which  means  they  were  delivered  not  to  the  original 
consignees,  but  to  another  mercantile  house,  from  whom  the 
defendants  purchased  them  in  good  faith,  at  their  full  value, 
without  notice ;  and  yet,  although  they  purchased  them  for 
a  fair  price,  in  the  usual  course  of  trade,  from  persons  hold- 
ing a  bill  of  lading  indorsed  to  them,  (the  usual  evidence  of 
such  property,)  and  who  were  in  actual  possession  of  the 
goods,  they  were  nevertheless  held  responsible  to  the  New 
Orleans  owners  for  their  value.  Saltus  v.  Everett^  20 
Wend.  267. 

This  principle  of  protection  has  its  limitation.  It  does 
not  embrace 

1.  Negotiable  paper  taken  honajide,  for  a  valuable  con- 
sideration, and  before  due. 

2.  Sales  made  by  agents,  who  have  been  held  out  by  the 
principal  as  having  authority  to  sell,  and  by  that  means  have 
been  enabled  to  deceive  the  vendee. 

3.  Judicial  sales,  to  which  many  of  the  rules  applicable 
to  market  overts  have  an  application,  and, 

4.  "Where  the  owner  has  been,  through  the  practice  of 
fraud,  induced  to  assent  to  a  sale,  and  the  fraudulent  vendee, 
before  any  movement  on  the  part  of  the  vendor  to  avoid 
the  sale,  has  transferred  them  to  a  lona  fide  purchaser  for 
value,  without  notice. 

§  644.  The  assent  can  never  be  sufficiently  perfect  to  re* 


MISTAKE  AND  IGNORANCE  AFFECTING  SALES.  381 

suit  in  a  contract,  where  tlie  parties  are  laboring  under  a 
mistake  in  relation  to  any  material  point  connected  with  the 
sale.  It  must  be  a  mistake  of  fact,  and  not  of  law,  as  every 
citizen  is  bound  to  know  the  latter.  Clarke  v.  Dutehcr,  9 
Cow.  674.  This  doctrine  is  not  universally  acquiesced  in. 
A  different  rule  is  established  in  Connecticut,  where  money 
paid  under  a  mistake  of  fact  or  laio  is  allowed  to  be  recovered 
back  where  there  was  no  legal  or  moral  obligation  to  pay. 
Northiip  V.  Graves,  19  Conn.  548.  The  same  doctrine  has 
also  been  established  in  Kentucky.  Hay  v.  Bank  of  Ken- 
tucky, 3  B.  Monroe,  510.  The  contrary  prevails  in  New 
Hampshire,  PeteTsl)orough  v.  Lancaster,  14  N.  Ilamp.  382. 
The  general  conclusion  that  has  been  arrived  at,  however,  is, 
"  that  the  contracts  and  acts  of  competent  parties,  when  free 
from  fraud  of  every  kind,  and  made  or  done  with  full  knowl- 
edge of  all  the  facts,  ought  not  to  be  disturbed  on  the  alle- 
gation of  ignorance  of  the  law."  Where  a  party  voluntarily 
chooses  to  remain  in  ignorance  when  oi^portuuitics  of  infor- 
mation are  aflbrded  him,  his  ignorance  will  not  avail  him  ; 
but  he  is  held  responsible  for  the  knowledge  which  his  neg- 
lected opportunities  would  have  afforded  him.  K,  however, 
money  has  been  paid  under  a  honafide  forgetfulncss  of  facts, 
which  disentitled  the  defendant  to  receive  it,  it  may  be  re- 
covered back.  Kelly  v.  Solair,  9  Mees.  &  Welsh.  54.  A 
distinction  has  also  been  taken  between  ignorance  and  mis- 
take of  the  law  ;  allowing  a  party  who  has  contracted  under 
a  clear  mistake  of  his  legal  rights,  especially  where  such 
rights  were  of  a  doubtful  character,  to  be  relieved  in  equity, 
but  denying  all  such  relief  in  case  of  ignorance  of  the  law. 
Lawrence  v.  Beaubein,  2  Bailey^s  S.  C.  Bep.  623. 

§  645.  Another  element  which  may,  on  the  application 
of  the  party  defrauded,  render  void  all  contracts  into  which 
it  enters,  is  that  of  fraud.  The  party  who  is  cheated  into 
the  giving  of  his  assent  has,  as  between  himself  and  the 
other  party,  a  right  at  any  time  to  withdraw  it,  and  thus 


382  DUTY   OF   MUTUAL  DISCLOSURES. 

avoid  tliG  contract.     Fraud  has  been  classified  hj  a  learned 
judge  into  four  classes. 

1.  That  -u'hich  is  actual,  arising  from  facts  and  circum- 
stances of  imposition. 

2.  It  may  he  apparent  from  the  intrinsic  value  and 
subject  of  the  bargain  itself — such  as  no  man  in  his  senses, 
and  not  under  delusion,  would  mabe,  on  the  one  hand,  and 
as  no  honest  and  fair  man  would  accept  on  the  other. 

3.  It  may  be  inferred  from  the  circumstances  and  condi- 
tion of  the  parties  ;  for  it  is  as  much  against  conscience  to 
take  advantage  of  a  man's  weakness,  or  necessity,  as  his  ig- 
norance. 

4.  It  may  be  collected  from  the  nature  and  circumstances 
of  the  transaction,  as  being  an  imposition  on  third  persons. 
Lord HardwicTcm.  Chesterfieldv^Janson, 2  Vesey  Sr.  125, 155. 

§  Q-^Q.  What  concerns  business  men  more  especially  to 
understand,  regards  the  duty  of  making  to  each  other 
mutual  disclosures  of  certain  facts.  The  facts  in  relation  to 
which  this  obligation  exists  must  be  material,  and  not  open 
and  naked,  and  such  as  are  apparent  to  observation.  One 
remaining  qualifi.cation  is  necessary  to  render  the  obligation 
perfect,  and  that  is,  that  the  party  to  communicate  possess 
the  knowledge  that  the  other  is  ignorant  of  them.  The 
moral  law  requires  the  vendor  to  disclose  all  defects  within 
his  knowledge.  The  common  law  adopts  this  prmciple  with 
some  modifications.  It  does  not  requu-e  a  disclosure  of  such 
defects  as  are  equally  open  to  the  observation  of  both  par- 
ties. But  in  regard  even  to  these,  the  vendor  must  neither 
say  nor  do  any  thing  that  will  divert  attention,  or  render 
less  perfect  the  observation  of  the  vendee.  It  permits  each 
party  to  avail  himself  of  the  benefit  of  his  own  superior 
knowledge,  provided  the  means  of  obtaining  it  are  equally 
open  to  each,  and  one  exercises  no  wrongful  influence  upon 
the  other  in  diverting  or  diminishing  the  amount  of  obser- 
vation which  he  would  otherwise  expend.  By  the  Enghsh 
nile,  if  the  representation  be  false  to  the  knowledge  of  the 


DUTY   OF  MAKHTG  DISCLOSUEES.  383 

party  making  it,  it  will  be  conclusive  evidence  of  fraud,  but 
if  made  honestly,  and  believed  to  be  true  by  sucli  party, 
although  not  true  in  fact,  yet  it  does  not  amount  to  fraud, 
or  create  a  cause  of  action.  The  rule  in  this  country  is  differ- 
ent, as  in  Smith  v.  Richards^  13  Peters.^  26,  it  was  held,  that  a 
party  selling  property  must  be  presumed  to  know  whether  the 
representation  he  makes  of  it  is  true  or  false.  If  he  knows 
it  to  be  false,  that  is  fraud  of  the  most  positive  kind  ;  but  if 
he  does  not  know  it,  then  it  can  only  be  from  gross  negli- 
gence ;  and  in  contemplation  of  a  court  of  equity,  represen- 
tations founded  on  a  mistake  resulting  from  such  negligence 
is  fraud.  Tlie  rule,  however,  is  more  rigid  in  equity  than  at 
law.  A  grantor  having  falsely  affirmed  that  a  farm  had 
been  valued  by  two  persons,  at  a  certam  price,  and  this 
having  induced  a  purchaser  to  contract  for  it ;  the  misrepre- 
sentation was  deemed  sufficient  by  Lord  Hardwick  to  with- 
hold a  decree  for  specific  perfoiTaance.  Buxton  v.  Lister,  3 
Atk.  386. 

§  647.  It  is  extremely  difficult  to  fix  a  limit,  or  decide 
in  what  cases  a  party  having  superior  knowledge,  is  boimd 
to  communicate  to  the  other.  Thus  in  the  case  put  by  Lord 
Thurlow  in  Fox  v.  Maclvreth,  2  Brovm,  420,  he  held  that  a 
party  negotiating  for  the  purchase  of  an  estate,  was  not  bound 
to  disclose  to  the  owner  his  knowledge  of  the  existence  of  a 
mine  on  the  land,  of  which  he  knew  him  to  be  ignorant,  on 
the  ground  that  there  was  no  fraud  in  the  case,  and  that  nice 
rules  of  honor  could  not  be  incorporated  into  the  law.  But 
here  the  Court  of  Chancery  was  asked  to  set  aside  a  sale. 
When  its  aid  is  invoked  to  carry  a  contract  into  execution 
by  the  enforcement  of  its  specific  perfonnance,  it  will  then 
yield  its  homage  to  higher  principles  of  ethic?,  and  refuse 
to  enforce  a  contract  where,  in  its  formation,  there  had  been 
such  a  reservation  of  superior  knowledge.  Parher  v.  Chant, 
1  John.  Chan.  Eep.  630. 


384        THE  DELIVERY  THAT  COMPLETES  THE  CONTEACT. 


QUESTIONS. 

"What  is  required  in  this  contract  as  to  assent  ?  What  illustration  ? 
"When  is  the  acce^jtance  of  a  x^rojiosition  implied  ?  "What  illustration  ? 
What  is  required  to  prevent  the  forming  of  a  contract  ?  What  if  propo- 
sition ho  accompanied  hy  any  conditions  or  limitations  ?  What  is  re- 
quired at  common  law  to  legalize  any  disposition  that  may  be  made  of 
property  ?  What  are  there  in  England  which  furnish  means  of  giving 
good  title  to  property  sold  ?  Are  any  such  here  ?  Can  stolen  goods  be 
sold  here  except  by  owner  so  as  to  give  a  good  title  ?  Suppose  honafde 
purchaser,  without  notice,  subsequently  sells  them,  can  he  be  made 
liable  ?  What  illustrations  ?  What  are  the  instances  not  embraced  within 
this  principle  of  protection  ?  What  effect  on  a  contract  of  sale  has 
laboring  under  a  mistake  ?  What  must  it  be  a  mistake  of?  Is  this  doc- 
trine universally  acquiesced  in  ?  What  is  the  general  conclusion  ?  What 
tho  rule  where  a  party  voluntarily  chooses  to  remain  in  ignorance  ? 
What^  is  the  effect  of  forgetfulness  of  the  law  ?  Any  distinction,  and 
what,  between  ignorance  and  mistake  of  the  law  ?  What  is  the  effect 
of  fraud  upon  the  contract  of  sale  ?  Who  may  set  it  up  ?  Into  how 
many  classes  may  fraud  be  classified?  What  are  they?  What  kind  of 
facts  require  mutual  disclosures  to  be  made  ?  What  must  be  the  charac- 
ter of  such  facts  ?  What  does  the  moral  law  require  ?  What  the  com- 
mon law  ?  What  does  it  permit  to  each  party  ?  What  does  the  English 
rule  require  ?  What  is  the  rule  in  this  country  ?  When  does  a  court  of 
equity  require  superior  knowledge  by  one  party  to  be  communicated  to 
the  other  in  order  to  the  granting  of  relief,  and  when  wiU  it  refuse  relief 
although  not  communicated  ? 


PART  IV. 

CEETAIN  THINGS  ESSENTIAL  TO   THE   COMPLETION  OF  THE  CONTEAOT. 

§  648.  Under  tMs  part  come  up  tvro  things  for  consid- 
eration. 

1.  The  statute  of  frauds^  as  affecting  the  contract  of 
sale,  and, 

2.  The  delivery  necessary  to  complete  the  contract. 

As  to  the  first,  the  legislation  in  this  country  has  copied 
after  the  English  statute,  the  influence  of  which  has  pervaded 
oui'  whole  system  of  jurisprudence.     That  requires  in  order 


t 


WHAT   C0NTEACT3   COME   WrniLM   STATUTE   OF   FRAUDS   385 

to  tlie  completion  of  a  contract  of  sale,  that  the  jjurchaser 
^hoiild  either 

1.  Accept  part  of  the  goods,  and  actually  receive  the 
same ;  or, 

2.  Give  something  in  earnest  or  in  part  j^ajment ;  in  the 
New  York  statute  something  in  part  payment ;  or, 

3.  That  some  note  or  memorandum,  in  writing,  of  the 
hargain  be  made,  and  signed,  or  subscribed  by  the  parties 
to  be  charged. 

§  G-19.  The  first  question  that  arises  here  relates  to  the 
kind  of  contract  that  comes  within  the  statute.  It  embraces 
all  contracts  in  which  there  is  nothing  wanting  for  comple- 
tion but  the  transfer  of  the  commodity  and  price  ;  and  all 
those  which  are  executory,  where  the  articles  sold  are,  at 
the  time  of  the  sale,  existing  in  the  same  shape  in  which 
they  are  to  be  delivered.  But  it  has  no  application  to  any 
executory  contract  for  the  future  manufacture  and  delivery 
of  goods,  or  the  changing  their  condition  by  work  and  la- 
bor to  be  expended  upon  them.  A  contract  is  made  for  the 
sale  of  a  boat  load  of  wheat,  to  be  delivered  at  a  subsequent 
day.  It  is  within  the  statute,  and  not  binding,  except  by  a 
compliance  with  the  statute.  But  a  contract  to  deliver 
wheat  at  a  future  day,  the  same  being  at  the  time  unthreshed. 
is  not  within  the  statute,  and  valid,  without  such  compliance. 
Jackson  v.  Covert,  5  Wend.  139.  Tliis  doctrine  is  based 
essentially  upon  an  older  case,  viz.,  that  of  Clayton  v.  An- 
drews^ 4  Burr.  2101 ;  but  the  doctrine  in  the  extent  to  which 
those  cases  carry  it  is  very  much  shaken  by  tlic  recent  case 
of  Garhutt  v.  Watson,  5  Barn.  <&  Aid.  G13,  holding  that 
where  sacks  of  flour  were  not  prepared  when  they  were  sold, 
but  were  to  be  got  ready  for  delivery  in  a  few  weeks,  and 
although  the  flour  was  not  ground  at  tlie  time,  yet  it  was 
still  a  contract  for  the  sale  of  goods,  and  was  within  the 
statute.  So  that  the  doctrine  may  now  probably  be  stated 
to  be,  that  if  the  article  sold  had  an  actual  existence  at  the 
time,  and  was  capable  of  delivery,  the  contract  is  within 
25 


386  NATURE   OF   DELTVEKY   KEQUIRED   BY    STATUTE. 

the  statute  of  frauds  ;  hut  if  it  is  to  he  afterwards  manufac- 
tured, or  prepared  hy  work  and  lahor  for  delivery,  then  the 
contract  is  not  within  the  statute. 

§  650.  The  dehvery  required  to  satisfy  the  statute  has 
some  peculiarities.  Although  it  he  only  of  a  part  of  the 
goods  sold,  yet  it  must  he  with  an  intention  of  vesting  the 
right  of  possession  of  the  whole  in  the  vendee  ;  and  the  lat- 
ter must  actually  accept  the  same  with  an  intention  of  tak- 
ing possession  as  owner.  The  acceptance  must  he  unequiv- 
ocal, final,  and  complete,  on  the  part  of  the  vendee  or  his 
agent.  The  carrier,  imless  the  authorized  agent  of  the  ven- 
dee, cannot  make  such  an  acceptance.  The  vendor's  order 
on  the  warehouseman  having  the  custody  of  the  goods  is 
insufficient,  unless  the  warehouseman  accept  the  order,  and 
aerree  to  hold  the  ffoods  on  account  of  the  vendee.  The  acts 
of  the  parties  may  imply  such  a  final  and  unequivocal  ap- 
propriation of  the  article,  as  to  he  a  sufficient  compliance 
with  the  statute.  Thus  where,  after  some  negotiation  be- 
tween a  livery  stable  keeper  and  a  horse  dealer,  and  a  pro- 
posed purchaser,  a  bargain  was  struck,  and  the  latter  re- 
quested the  former  to  keep  them  at  livery  for  him,  upon 
which  they  were  removed  out  of  the  sale  stable  into  another 
stable,  this  was  held  to  he  a  sufficient  delivery  under  the 
statute.  Elmore  v.  Stone,  1  Taunt.  458.  This  case  has  been 
justly  censured  as  carrying  the  docti'ine  of  constructive  de- 
livery to  the  utmost  verge  of  safety.  A  stricter  doctrine 
has  been  generally  adhered  to,  and  that  case  could  now  be 
hardly  deemed  as  fm-nishing  a  safe  precedent  to  follow.  But 
if  acts  are  solely  relied  upon,  they  must  be  imequivocal  in 
their  character,  and  if  the  vendor  still  retains  possession,  it 
must  be  under  circumstances  showing  that  he  retains  it  not  in 
his  own  right,  but  only  as  agent  or  bailee  of  the  vendee.  Thus 
where  a  horse  was  verbally  sold,  but  was  to  remain  with  the 
vendor  twenty  days  without  charge,  and  at  the  exph-ation 
of  that  time  was  sent  to  grass  as  one  of  the  vendor's  horses  ; 
it  was  held  that  there  was  here  no  sufficient  delivery  and 


ESSENTIALS    OF   DELIVEKY   REQUIRED   BY    STATUTE.        387 

acceptance.  Carter  v.  Touissant,  5  Barn.  &  Aid.  855.  In 
the  case  of  a  column  of  granite  of  such  weight  and  magni- 
tude, as  not  to  be  susceptible  of  any  other  delivery,  the  Ro- 
man law  allowed  possession  to  be  taken  by  the  eyes  and  the 
declared  intention  ;  but  our  law  rcfjuircs  some  act  of  accept- 
ance to  satisfy  the  statute,  and  holds  that  a  mere  naked 
agreement,  though  the  property  was  designated  by  the  par- 
ties at  the  time,  to  be  not  a  sufficient  delivery  and  accej^t- 
ance.  Shindler  v.  Houston,  1  Comst.  261.  Where  there  is 
an  entire  contract,  and  nothing  remains  for  the  vendor  to  do, 
a  delivery  of  a  part  is  a  sufficient  delivery  of  the  whole 
within  the  statute  ;  as  where  goods  were  purchased  at  auc- 
tion in  several  parcels,  upon  distinct  and  separate  bids,  to  be 
paid  for  in  a  note  at  a  future  day,  it  was  held  that  the  whole 
constitutes  but  one  contract,  and  the  delivery  of  some  of  the 
parcels  is  sufficient  to  take  the  case  as  to  the  residue  out  of 
the  operation  of  the  statute.  Mills  v.  Hunt,  20  Wend.  431. 
§  651.  The  delivery  and  acceptance,  in  order  to  comply 
with  the  statute,  must,  it  is  said,  be  so  perfect  and  comj^lete 
as  to  negative  four  things,  viz. : 

1.  Tlic  vendor's  right  of  lien. 

2.  The  vendor's  right  of  stoppage  in  transitu. 

3.  The  right  of  either  party  to  cancel  the  contract. 

4.  The  right  of  the  vendee  to  reject  the  articles  on  tlic 
score  of  deficiency  either  in  quantity  or  quality.  Tliis  has 
long  been  received  as  undoubted  law,  and  acquiesced  in  as 
such,  but  in  a  recent  case  in  England,  Morton  v.  Tibhit,  15 
Q.  B.  428,  Lord  Chief  Justice  Campbell  wholly  dissents 
from  the  doctrine  contained  in  the  two  last  jiropositions,  and 
holds  that  an  acceptance  may  be  sufficient  to  satisfy  tlie  stat- 
ute, although  the  purchaser  has  a  right  to  object  to  the 
quantity  or  quality  of  the  article,  and  to  ro]>udiate  tlie  sale. 
It  is  obvious  that  there  can  be  no  actual  receipt  while  the 
goods  are  subject  to  the  vendor's  lien  or  right  of  stoppage 
in  transitu,  and  lience  that  merely  marking  and  setting  aside 
the  goods  sold,  at  the  vendee's  request,  and  with  a  view  to 


388  THE   DIFFEKENT   KINDS   OF   DELIVERY. 

their  appropriation  by  liim,  is  an  insufficient  delivery  under 
the  statute.  And  in  case  of  the  delivery  of  a  sample  of  the 
goods  sold,  there  is  no  sufficient  compliance  with  the  statute 
unless  the  sample  is  considered  by  both  parties  as  a  part  of 
the  commodity  itself,  and  hence  as  diminishing  by  so  much, 
the  bulk  thereof  to  be  finally  delivered. 

§  652.  As  regards  the  written  memorandum  required  by 
the  statute,  it  must  contain  a  distinct  and  clear  statement  of 
the  terms  of  the  agreement,  together  with  the  names  of  the 
parties.  The  terms  need  not  be  all  upon  the  same  paper. 
They  may  be  collected  from  the  correspondence  of  the  par- 
ties, or  from  any  two  papers  referring  to  each  other,  or  to 
the  same  contract.  An  auctioneer  or  broker  is  the  agent 
"of  both  parties  sufficient  to  bind  them  by  the  memorandum, 
and  under  the  wording  of  the  statute  of  this  State,  it  must 
be  subscribed^  or  the  signature  must  be  placed  at  the  end  of 
it,  although  it  is  sufficient  if  it  be  done  by  the  party  to  be 
charged.  Bams  v.  Shields,  24  Wend.  322,  and  reversed  in 
26  Wend.  341. 

§  653.  Delivery  may  be  of  three  difi'erent  kinds :  that 
which  will  satisfy  the  statute,  that  which  will  destroy  the 
lien  of  the  vendor,  and  that  which  will  pass  the  title  to  the 
thing  sold.  The  general  rule  here  is,  that  no  title  can  pass 
to  the  vendee  so  long  as  any  thing  yet  remains  to  be  done 
between  the  vendor  and  the  vendee,  in  relation  to  the  goods, 
and  which  is  necessary  to  give  the  latter  a  perfect  control 
over  them.  This  usually  applies  to  marking,  weighing,  and 
numbering  them,  so  that  they  may  be  separated,  distin- 
guished, and  indentified  from  every  other.  Thus  where 
goods  were  sold  while  lying  at  a  warehouse,  at  such  a  price 
per  hundred  weight,  but  the  exact  weight  not  being  known, 
was  afterwards  to  be  ascertained.  Held,  no  property  passed 
to  the  vendee.  Hanson  v.  Meyer,  6  East.  614.  If,  however, 
every  thing  material  has  been  done,  and  only  some  trifling 
act  remains,  the  property  will  pass.  As  where  trees  were 
sold  by  the  cubic  foot,  and  the  number  in  each  was  ascer- 


WHEN   TITLE   PASSES  WITHOUT   DELR^EEY.  389 

taincd,  but  there  liad  Lecn  no  adding  up,  and  thus  ascer- 
taining the  aggregate  number.  Held,  this  did  not  prevent 
the  title  from  passing.  Tansley  v.  Turner,  2  Bing.  If.  C. 
151.  It  is  not,  hovrever,  essential  to  the  transfer  of  title  that 
the  separation  should  be  prior  to  the  delivery,  and  hence 
where  there  was  a  delivery  of  the  whole  to  the  pm-chaser 
of  a  part,  it  was  held  to  carry  with  it  the  right  of  selection, 
and  was  a  sufficient  delivery  to  pass  the  title.  Crofoot  v.  Ben- 
nett, 2  Comst.  258.  And  when  the  vendor  has  done  all  that 
can  be  required  in  relation  to  a  portion  of  the  property  sold, 
the  title  to  that  part  passes,  as  where  a  stack  of  bark  was 
sold  at  a  certain  price  per  ton,  and  a  certain  part  was 
weighed  and  delivered  ;  the  vendee  was  held  to  have  ac- 
quired title  only  in  that  part  that  was  weighed.  Simmons 
V.  Swift,  5  Barn.  c&  Cress.  857.  And  in  the  recent  case  of 
Kimberley  v.  Patcliin,  19  Ifev)  York  Rep.  330,  it  was  held 
that  where  a  specified  quantity  of  grain  was  sold,  its  separa- 
tion from  a  mass  indistinguishable  in  quality  or  value,  within 
which  it  was  included,  is  not  absolutely  necessary  to  pass 
the  title  ;  and  hence,  where  the  owner  of  a  large  quantity  of 
wheat  which  was  lying  in  a  mass  at  his  warehouse,  sold 
60,000  bushels  of  it  for  a  specified  price,  and  gave  to  the 
vendee  a  receipt  acknowledging  himself  to  hold  the  wheat 
subject  to  the  purchaser's  order,  it  was  held  that  the  title 
passed. 

§  65-1.  I^either  delivery  nor  payment  are  absolutely  es- 
sential to  pass  the  title  to  the  thing  sold.  Tlic  rule  is,  that 
"  if  nothing  remains  to  be  done  on  the  part  of  the  seller,  as 
between  him  and  the  buyer,  before  the  goods  ])urchased  are 
to  be  delivered,  the  property  in  the  goods  immediately  passes 
to  the  buyer,  and  that  in  the  price  to  the  seller."  The  rea- 
son of  this  is,  that  the  right  of  property  docs  not  depend 
upon  tlie  actual  possession,  as  the  vendor  may  still  retain 
his  right  of  lien  for  the  unpaid  price,  and  yet  the  goods  may 
belong  to  the  vendee,  and  devolve  upon  him  the  risk  of  loss. 
So  by  agreement  the   thing  sold  may  remain  with   the 


390  DIFFEKENT   KINDS   OF   DELIVEKT. 

vendor  for  storage,  and  yet  bo  at  the  risk  of  the  vendee. 
Lansing  v.  Turner,  2  John.  13.  But  it  has  been  held  that 
when  the  purchaser  of  a  thing  sold  has  acquired,  as  against 
the  seller,  a  right  to  demand  it,  the  sale  is  not  complete  as  to 
third  persons,  until  the  payment  of  the  price  and  delivery 
of  the  article ;  and  if  neither  of  these  be  done,  a  sale  in 
good  faith  to  a  third  person  followed  by  payment,  and  de 
livery,  will  transfer  the  title  to  him,  the  first  purchaser  hav- 
ing no  other  remedy  except  his  action  for  damages  against 
the  seller.  Lafon  v.  De  Armas,  12  Bob.  Louisiana  Rep, 
598. 

§  655.  There  are  many  things  relating  to  delivery  im- 
portant to  notice.  It  may  be  remarked  in  the  first  place, 
that  a  delivery  which  is  sufiicient  to  destroy  the  vendor's 
right  of  lien,  and  to  comply  with  the  requisitions  of  the 
statute,  is  always  sufficient  to  pass  the  title  to  the  vendee. 
The  only  proper  object  of  inquiry  here,  therefore,  is,  what 
are  the  fewest  conditions,  what  the  smallest  number  of  facts, 
that  will  constitute  a  delivery  sufficient  for  this  purpose. 
A  delivery  to  the  purchaser's  agent,  or  to  a  common  carrier 
to  be  carried,  is  sufficient.  So,  also,  is  a  delivery  on  board 
a  ship  chartered  by  the  purchaser.  But  in  the  case  of  prop- 
erty consigned,  if  no  agreement  exists  between  the  parties, 
the  consignment  will  be  at  the  risk  of  the  consignor,  until 
the  consignee  has  done  some  act  recognizing  the  appropria- 
tion of  it  to  a  particulai'  specified  purpose. 

§  656.  A  symbolical  delivery  is  sufficient  when  that  is 
the  best  which  the  nature  of  the  ease  admits  of.  A  store 
of  goods  may  be  delivered  by  handing  over  the  key.  The 
receipt  of  a  storekeeper  in  possession  of  the  goods  may  be 
sufficient.  So  a  transfer  of  them  on  the  warehouseman's  or 
wharfinger's  book  to  the  name  of  the  buyer.  The  cutting 
off  the  spills  of  wine  casks,  and  marking  upon  them  the  ini- 
tials of  the  purchaser's  name,  is  sufficient.  Delivery  of  a 
sample  has  been  held  sufficient  to  transfer  title,  when  some 
obstacle  presents  to  a  complete  delivery,  and  the  sample  is 


PLACE   OF   DELIYEKY,  391 

taken  as  part  of  the  quantity  purchased,  and  as  tlio  best  de- 
livery the  circumstances  will  admit  of.  The  sale  of  goods 
at  sea  is  accomplished  by  the  delivery  of  the  documentary 
evidence  of  title.  So,  also,  where  the  property  at  the  time 
of  sale,  from  its  situation,  is  incapable  of  deliver}^,  that  of 
the  bill  of  sale  or  other  evidence  of  title,  is  sufficient  to 
tranjer  the  property  and  the  possession.  It  is  sufficient  to 
take  a  bill  of  parcels  and  order  from  the  vendor  on  the  ware- 
houseman, and  there  marking  the  goods  with  the  mitials  of 
one's  name  ;  or  in  lieu  of  the  latter,  paying  the  price.  Tlie 
selecting  and  marking  of  sheep  in  the  possession  of  B,  who 
is  desired  to  retain  possession  of  them  for  the  vendee,  has 
been  held  to  be  a  sufficient  delivery  to  complete  the  sale  and 
pass  the  property. 

§  657.  Where  nothing  but  the  delivery  and  acceptance 
is  wanting  to  complete  fully  the  contract  of  sale,  the  vendee 
cannot,  by  refusing  to  accept,  throw  the  risk  of  loss  upon 
the  vendor.  The  course  usually  pursued  in  case  of  neglect 
or  refusal  by  the  former  to  pay  for  and  take  the  goods,  is 
for  the  latter  to  sell  them  at  2)ublic  sale,  and  charge  the 
vendee  with  any  deficiency  in  the  amount  of  the  sales.  In 
the  State  of  ISTew  York  it  is  not  held  necessary  to  dispose 
of  them  at  public  sale.  They  may  be  sold  in  the  ordinary 
manner  upon  giving  notice  to  the  other  uarty.  Crooks  v. 
Moore,  1  8andf.  297. 

§  658.  As  to  the  place  of  delivery,  the  general  rule  is, 
that  if  no  place  is  designated  by  the  contract,  the  articles 
are  to  be  delivered  at  the  place  where  they  were  at  the  time 
of  the  sale.  But  where  the  sale  is  to  pay  a  debt  by  the  de- 
livery of  specific  articles,  the  balance  of  authority  is,  that 
the  property  must  be  delivered  at  the  creditor's  place  of 
residence.  In  some  of  the  l^ew  England  States,  especially 
Yermont,  the  practice  has  formerly  been  very  general  of 
giving  notes  payable  in  cattle,  grain,  and  other  portable  ar- 
ticles, and  where  no  place  of  payment  is  designated,  the 
delivery  is  to  be  at  the  creditor's  place  of  residence  at  the 


392  PLACE  OF  DELIVEKY. 

time  the  note  was  given.  Where  the  articles  are  ponde- 
rous and  bulky,  the  rule  has  been  held  to  be  that  the  debtor 
must  seek  out  the  creditor,  or  get  him  to  name  a  place,. and 
if  he  declines  or  names  an  unreasonable  one,  then  the  debtor 
may  tender  a  delivery  at  a  place  suitable  for  the  purpose, 
and  presumptively  in  the  contemplation  of  the  parties.  Tlie 
effect  of  a  valid  tender  of  specific  articles  is  to  discharge 
the  debtor  from  his  contract,  and  to  transfer  the  right  of 
property  in  the  article  to  the  creditor. 

QUESTIONS. 

"What  two  things  essential  for  the  completion  of  the  contract  ?  "What 
the  essential  provisions  of  the  statute  of  frauds  ?  "What  kind  of  contracts 
come  within  the  statute  ?  "What  class  do  not  come  within  the  statute  ? 
"What  is  a  peculiarity  of  delivery  which  is  necessary  to  comply  with  the 
statute  ?  "What  the  character  of  the  acceptance  ?  "What  illustrations  as 
to  carrier  and  order  of  vendor  ?  "What  may  acts  of  the  parties  imply  ? 
"What  illustration  ?  How  must  acts  he  in  order  to  be  relied  upon  ?  "When 
is  a  delivery  of  a  part  a  suflBcient  delivery  of  the  whole  within  the  statute? 
What  four  things  must  a  delivery  and  acceptance  negative  in  order  to 
comply  with  the  statute  ?  "What  modification  in  a  recent  case  ?  What 
must  the  written  memorandum  contain  to  comply  with  the  statute  ? 
What  allowable  as  to  number  of  papers  ?  "Where  must  signature  be 
placed,  and  of  what  party  ?  How  many  different  kinds  of  delivery  are 
there  ?  What  is  the  general  rule  as  to  the  passing  of  title  to  the  vendee  ? 
What  does  this  usually  apply  to  ?  What  illustration  ?  How  if  every 
material  thing  has  been  done,  and  only  some  trifling  act  remains  ?  What 
illustration  ?  Is  it  essential  that  separation  should  be  prior  to  delivery  ? 
How  is  it  with  delivery  of  a  portion  as  to  passing  title  in  the 
whole  ?  What  illustration  ?  What  is  the  rule  as  to  transfer  of  title 
where  there  is  no  payment  or  delivery  ?  What  the  reason  of  it  ?  How 
as  to  third  persons  stands  a  sale  until  payment  and  delivery  ?  Which 
of  the  three  kinds  of  delivery  may  be  the  slightest,  and  yet  be  sufficient  ? 
How  is  it  with  delivery  to  agent  ?  How  on  shipboard  ?  What  neces- 
sary in  case  of  consignment  ?  When  is  symbolical  delivery  suflBcient  ? 
What  are  some  instances  of  symbolical  delivery  ?  When  is  delivery  by 
sample  suflBcient  ?  "When  delivery  of  goods  sold  while  at .  sea  ?  "Wlaat 
are  some  other  modes  of  delivery  ?  What  is  the  course  to  be  pursued 
in  case  of  neglect  or  refusal  to  receive  the  goods  ?  What  is  the  general 
rule  as  to  place  of  delivery  ?    "What,  when  sale  is  made  to  pay  a  debt  ? 


DIFFEKENT  KINDS   OF  WAEKANTT.  393 

"What  the  practice  in  the  New  England  States  ?  "Where  is  the  delivery 
to  be  ?  How,  and  where,  in  case  the  articles  are  ponderous  and  bulky  ? 
What  i3  the  effect  of  a  valid  tender  of  specific  articles  ? 


PART  V. 

WARRANTY. 

§  659.  Tliere  are  two  kinds  of  waiTanty  essential  to  be 
understood  in  connection  with  sales  of  personal  property. 
These  are  the  iinpUed^  and  the  express.  Of  the  implied^ 
that  the  most  universally  conceded  is  tlie  "warranty  of  title. 
A  person  in  actual  possession  of  personal  property,  sells  it 
to  another,  and  delivers  over  the  possession  to  the  vendee. 
He  is  held  to  deliver  with  it  an  implied  warranty  that  his 
title  to  the  article  is  perfect,  and  that  hence  if  another  claims 
and  dispossesses  the  vendee  of  the  article  or  its  value,  as 
having  the  superior  title,  such  vendee  has  his  remedy  against 
his  vendor  for  its  value  upon  this  implied  warranty.  Tliis 
rule  has  one  limitation,  and  tliat  is,  that  the  vendor  must  be 
in  possession  of  the  property  he  sells.  McCoy  v.  Artcher, 
3  Barh.  S.  C.  liej).  323.  Tlie  rule,  however,  extends  to,  and 
embraces  negotiable  paper,  and  hence  where  the  holder  of  a 
note  which  was  usurious,  and  uncollectable  in  his  hands, 
transferred  it  without  indorsement  or  notice  to  the  vendee, 
who  was  defeated  in  liis  attempt  to  collect  it ;  it  was  held 
that  the  party  so  accepting  the  transfer,  was  at  liberty  to  act 
upon  the  implied  assertion  of  the  validity  of  the  paper,  and, 
if  defeated  in  his  attempt  to  collect  it,  had  liis  remedy  over 
against  his  vendor  upon  this  implied  warranty.  Ddaicarc 
Bank  v.  Jarvis^  20  New  York  Rep.  226. 

§  660.  By  the  ci\'il  law  there  is  a  further  imi)lied  war- 
ranty that  a  sale  for  a  sound  price  implies  a  warranty  of 
soundness  against  all  faults  and  defects.  This  is  also  the 
present  rule  in  Louisiana  and  South  Caroluia,  although  its 
permanence  in  the  latter  State  is  a  matter  of  much  doubt. 
The  maxim  of  the  comfnon  law,  as  to  quality,  is  caveat  emp- 


394  WIIEN  TIIEKE  IS  IMPLIED  WAEKANTY. 

tor,  tlie  pTircliascr  must  himself  assume  all  the  risk.  lie 
may  throw  it  upon  the  vendor  by  requiring  an  express  "war- 
ranty. And  so,  also,  tlie  law  gives  him  a  remedy  in  case  of 
fraud  or  deceit.  But  in  the  absence  of  both  these  the  rule  is, 
that  the  buyer  who  examines  the  article  himself,  must  abide 
by  all  losses  arising  from  latent  defects,  equally  unknown  to 
both  parties.  Sioett  v.  Colgate,  20  John.  196.  The  doctrine 
that  in  the  sale  of  an  article  there  is  an  implied  wan-anty 
that  it  is  merchantable,  or  fit  for  the  purpose  intended,  has 
received  much  countenance,  especially  in  England ;  but 
when  fully  investigated  it  seems  to  be  the  usage  of  trade,  the 
tnamifactured  goods,  or  the  specific  purpose,  that  raises  the 
implied  warranty.  Jones  v.  Bowden,  4  Taimt.  8-17.  Laing 
V.  Fidgeon,  6  Taunt.  108.  Grag  v.  Cox,  4  Barn.  &  Cress. 
108.  Some  disposition  has  been  manifested  towards  the 
adoj^tion  of  that  doctrine  in  this  country.  Tlius  in  the 
sale  of  provisions  for  immediate  domestic  use,  it  has  been 
held  there  was  an  implied  warranty  that  they  were  whole- 
some, but  otherwise  if  sold  as  merchandise.  But  the  old 
rule  of  the  common  law  that  there  is  no  such  hnplied  war- 
ranty, is  sustained  in  Sart  v.  Wright,  17  Wend.  267  ;  same 
case,  18  Wend.  449.  Waring  v.  Mason,  18  Wend.  425.  Mc- 
Farland  v.  Newman,  9  Watts,  55.  This  may  now  probably 
be  considered  the  settled  doctrine  applicable  to  executed 
contracts  of  sale.  In  those  which  are  executory,  where  an 
article  is  to  be  delivered  at  a  future  day,  or  to  be  manufac- 
tured and  delivered,  there  is  an  implied  warranty  that  the 
article  shall  be  at  least  of  a  medium  quality  or  goodness. 
In  such  case,  if  it  comes  short  of  being  merchantable,  the 
vendee  is  at  liberty  to  return  it.  This  is  a  very  reasonable 
rule,  as  the  delivery  in  such  case  offers  to  the  vendee  the 
first  opportunity  of  examining  the  article.  But  the  right  to 
return  it  ought  to  be  exercised  as  soon  as  the  defect  is  dis- 
covered, as  the  retaining  it  for  any  length  of  time  would 
raise  a  presumption  of  acquiescence  in  its  quality. 

661.  The  practice  of  any  deception  by  the  vendor  gives 


WHAT  AN  EXPRESS  WAEEANTY  AND  ITS  OBJECT.        395 

the  vendee  a  clioice  of  two  remedies  :  He  may  either  affirm 
the  contract,  and  recover  damages  for  the  fraud  peqjetrated 
upon  him  ;  or  he  may  rescind  the  contract,  retm-n  the  tiling 
purchased,  and  recover  Lack  what  he  may  have  paid  for  it. 
Campbell  v.  Fleming,  1  Adolpli.  cG  Ell.  40.  Quite  an  im- 
j)ortant  question  has  been  made,  whether  tlie  purchaser's 
omission  to  disclose  his  insolvency  to  the  vendor  at  the  time 
of  the  purchase,  constitutes  such  a  fraud  as  will  enable  the 
latter  to  avoid  the  sale.  And  it  has  been  held  that  when  the 
vendor  makes  no  inquiries,  and  the  vendee  resorts  to  no 
fraud  or  artifice  to  mislead,  he  may  remain  silent  as  to  his 
j)ecuniary  circumstances  ;  but  the  suggestion  was  made  that 
a  failure  to  disclose  a  marked  and  sudden  change  in  his  cir- 
cumstances for  the  worse,  and  which  he  had  every  reason  to 
suppose  was  unknown  to  the  vendor,  might  be  such  a  fraud 
as  would  avoid  the  sale.  Wichols  v.  Pinnei\  18  New  York 
Rep.  295. 

§  G62.  An  express  wan^anty  may  consist  of  any  positive 
affirmation  made  by  the  vendor  at  the  time  of  the  sale,  in 
relation  to  the  goods  sold,  and  which  is  intended  to  have 
that  effect.  It  is  then  essentially  a  contract,  and  we  must 
look  to  its  terms,  to  its  own  limitations  and  restrictions,  to 
determine  what  are  the  rights  of  the  parties.  It  is  to  have 
applied  to  it  a  strict  rule  of  construction,  the  vendor  laying 
himself  under  obligations  to  make  good  his  warranty  to  the 
letter,  whether  the  quality  he  has  warranted  be  material  or 
not.  And  wherever  there  is  an  express  waiTanty  as  to 
any  single  point,  the  law  will  im2:)ly  none  beyond  its  express 
terms. 

§  663.  The  object  of  a  general  wai'ranty  is  to  protect 
against  defects  which  may  not  be  apparent  to  the  vendee. 
He  seeks  by  it  to  save  the  necessity  of  any  very  strict  scru- 
tiny, and  to  throw  upon  the  vendor  the  risk  of  all  defects 
which  are  not  open  to  the  common  observer.  As  to  all  those 
which  are  patent,  and  apparent  upon  the  most  careless  in- 
spection, they  are  not  covered  by  the  warranty,  as  they  arc 


396  WHAT  AMOUNTS  TO  A  WAEKANTT. 

not  supposed  to  have  entered  into  the  mind  of  the  parties 
when  it  was  required  and  given  ;  as  where  on  the  sale  of  a 
race-horse  the  purchaser  was  told  that  he  was  a  crib-hiter, 
and  had  a  splint,  all  which  was  apparent,  it  was  held  that  a 
warranty  tliat  the  liorse  was  sound  wind  and .  limb,  at  the 
time  of  the  sale,  did  not  extend  to  those  defects.  Marget- 
S071  V,  Wright,  5  Moore  &  Payne,  606.  But  to  exonerate 
the  vendor  from  liability  in  such  a  case,  the  circumstances 
must  furnish  an  irresistible  presumption  that  the  vendee  had 
full  knowledge  of  the  defect.  In  regard  to  all  such  as  are 
not  clearly  obvious,  the  vendee  has  a  right  to  rely  upon  his 
warranty.  It  is  essential  that  the  warranty  should  be  made 
either  at  the  time  of  the  sale,  or  previously,  and  with  ex- 
press reference  to  it.  If  subsequently,  it  can  form  no  in- 
ducement to  the  contract,  which  must,  therefore,  be  wholly 
without  consideration, 

§  Q'6'^.  A  question  has  been  raised  regarding  what  may 
be  considered  as  amounting  to  a  warranty ;  whether  mere 
words  of  clescri2)tion  which  are  contained  in  a  bill  of  par- 
cels, a  receipt,  or  any  other  written  memorandum  of  sale, 
should  be  held  to  constitute  an  express  warranty.  "Where 
an  express  warranty  and  a  written  description  are  contained 
within  the  same  instrument,  a  defect  which  prevents  the  ar- 
ticle from  answering  the  description,  but  does  not  violate 
the  warranty,  will  give  no  right  of  recovery  to  the  vendee 
as  upon  a  breach  of  warranty.  As  where  upon  the  sale  of 
a  horse  a  receipt  was  given  "  Received  of  A  B  £10  for  a 
grey  fom'-year  old  colt,  warranted  sound  in  every  respect,"  it 
was  held  that  so  far  as  concerns  the  descriptive  portion  of  the 
receij)t,  the  vendee  could  not  recover  without  proving  a  wilful 
misrepresentation,  as  that  was  not  covered  by  the  warranty. 
Biidd  V.  Fairmaner,  8  Bing.  48.  Where  there  is  no  express 
warranty  contained  in  the  instrument,  the  description,  if  clear 
in  its  terms,  and  amounting  to  an  affirmation  that  the  goods 
sold  correspond  thereto,  will  have  the  effect  of  a  warranty. 

§  665.  In  the  case  of  a  sale  by  sample,  there  may  be  a 


WHEN   SALE  BY   SAMPLE  IMPLIES  WAEKANTT.  397 

"wan'anty  that  the  bulk  corresponds  to  the  sample.  The 
most  that  can  here  be  claimed  is,  that  the  whole  quantity 
of  goods  sold  answers  to  the  sample,  and  if  there  proves  to 
be  any  latent  defect  in  that,  as  well  as  in  the  bulk,  the  ven- 
dor will  not.  be  responsible,  as  an  opportimity  is  presented 
him  of  fully  examining  the  sample.  J3ut  it  is  not  every  sale 
where  a  sample  is  exhibited  that  will  create  a  warranty.  A 
mere  sale  by  sample  does  not  have  that  effect.  The  rule  is, 
that  where  the  goods  in  their  bulk  are  fully  exposed  to  the 
purchaser's  examination,  he  is  bound  to  make  it,  and  cannot 
claim  damages  without  showing  an  express  warranty.  That 
the  mere  exhibition  of  the  sample  at  the  time  of  the  sale  can 
never  raise  an  implied  warranty  as  to  the  nature  or  quality 
of  the  bulk  of  the  commodity,  but  that  other  evidence  is  re- 
quired to  show  that  both  parties  mutually  imderstood  that 
they  were  dealing  with  the  sample,  upon  an  agreement  by 
the  vendor  that  the  bulk  of  the  commodity  corresjjonded 
with  it.  And  that  even  where  a  personal  examination  was 
not  practicable,  that  of  itself  furnishes  no  sufficient  ground 
to  say  that  the  sale  was  by  sample.  Hargous  v.  Stone,  1 
Seld.  73.    Beirne  v.  Dord,  1  Seld,  95. 

QUESTIONS. 

Ho-w  many  kinds  of  -warranty  on  sales  of  personal  property  ?  "What 
are  they  ?  "What  instance  of  implied  warranty  ?  What  the  limitation  ? 
"What  embraced  within  the  rule  ?  "What  further  implied  warranty  by 
the  civil  law  ?  Within  what  States  does  it  prevail  ?  What  is  the  maxim 
of  the  common  law  ?  On  whom  may  the  vendee  throw  the  risk,  and 
how  ?  How,  in  case  of  fraud  or  deceit  ?  In  absence  of  both,  what  is 
the  rule  ?  What  is  the  rule  in  case  of  executory  contracts  ?  What  the 
reason  of  it?  When  must  the  right  to  return  articles  be  exercised? 
What  remedies  does  the  practice  of  deception  give  to  the  vendee? 
What  may  an  express  warranty  consist  of?  What  the  rule  of  construc- 
tion applied  to  it  ?  What  is  the  object  of  a  general  warranty  ?  What 
defects  are  not  covered  by  the  warranty  ?  What  illustration  ?  What, 
in  such  case,  must  circumstances  furnish  ?  To  what  defects  does  the 
warranty  apply  ?  When  must  the  warranty  be  made  ?  How,  if  made 
subsequently  ?    And  why  ?    Do  mere  words  of  description  contained  in 


398  EIGHT   OF   COPAKTNER   TO   ASSIGN. 

an  instrument  embracing  a  warranty  amount  to  one  ?  What  illustra- 
tion ?  IIow,  wliere  there  is  no  express  warranty  contained  in  the  instru- 
ment ?  AV]iat  may  there  be  when  the  sale  is  by  sample  ?  What  is  the 
most  that  can  here  be  claimed  ?  Does  a  mere  sale  by  sample  create  a 
warranty  ?  What  is  the  rule  in  such  sales  ?  Does  a  mere  exhibition  of 
a  sample  raise  an  implied  warranty  ?  What  other  evidence  is  required 
to  have  that  effect  ?  Will  the  fact  that  personal  examination  is  not 
practicable  afford  presumption  that  sale  was  by  sample  ? 


CHAPTER  V. 

CONTRACT   OF   TRANSFER   OF   PROPERTY. 
SECOND. — BY   ASSIGNMENT. 

PART  I. 

ASSIGNMENT.      BY    WHOM    MADE,   ITS    NATTTEE,     MANNER    OF    EXECUTION, 

AND  EFFECT. 

§  666.  The  assignment  here  intended  is  that  which  is 
voluntarily  made  by  a  debtor  on  the  eve  of  insolvency.  The 
frequency  of  its  occurrence  in  this  country  renders  some 
knowledge  of  it  essential  to  business  men.  It  is  mainly  the 
growth  of  less  than  half  a  century,  and  yet  it  comprises  a 
large  body  of  law.  The  general  rule  is,  that  all  natm'al 
persons  who  are  competent  to  enter  into  contracts,  are  also 
competent  to  make  voluntary  assignments. 

§  667.  A  question  of  much  difficulty  has  presented  itself 
regarding  the  right  of  one  copartner  to  make  a  valid  assign- 
ment of  the  copartnership  effects,  either  without  the  concur- 
rence, or  against  the  will  of  the  other  or  others.  The  right  of 
partners  to  unite  in  such  disposition  of  their  partnership  effects 
for  the  payment  of  partnership  debts  has  never  been  doubted. 
Kor  would  the  execution  by  one  in  the  partnership  name,  and 
with  the  concurrence  of  the  other,  leave  any  doubt  of  its  valid- 
ity.   In  the  State  of  ITew  York  it  has  been  held  that  one  part- 


DIFFICULTIES  IN  THE   WAT  OF  ASSIGNMENT.  399 

ner,  without  the  consent  of  his  copartners,  may  make  a  valid 
assignment  in  the  name  of  the  firm,  of  all  or  any  part  of  the 
partnership  effects,  directly,  to  a  firm  creditor  in  payment 
of  a  partnership  debt,  but  that  there  was  no  implied  author- 
ity derived  from  the  partnership  relation,  that  could  em- 
power one,  without  the  consent  of  the  others,  to  make  a 
general  assignment  of  the  partnership  effects  to  a  trustee,  for 
the  benefit  of  creditors,  and  giving  preferences  to  one  class 
of  them  over  another.  Ecjberts  v.  TFoocZ,  3  Paige,  517.  Ha- 
vens V.  Hiossey,  5  Paige,  30.  Li  some  other  States  the  right 
is  fully  conceded  to  assign  to  trustees  in  the  ordinary  manner. 
Robinson  v.  Cr.owder,  4  McCoirl,  519.  Mills  v.  Barber,  4 
I>ay,  428. 

§  668.  Corporations  have,  also,  at  common  law,  the  same 
right  to  assign  their  corporate  property  in  trust  for  the  bene- 
fit of  their  creditors.     Catlin  v.  Eagle  Bank,  6  Conn.  231. 

§  669.  Tlic  nature  and  effect  of  the  assignment  is  to  vest 
all  the  assignor's  property  and  rights  of  property  in  the  as- 
signee, to  be  disposed  of  upon  the  trusts  stated  in  the  instru- 
ment. The  assignee  occupies  the  position  of  a  trustee,  and 
the  creditors  are  those  beneficially  interested  in  the  execu- 
tion of  the  trust.  Tlie  first  difiiculty  presenting  itself  in  the 
way  of  voluntary  assignments  is  the  provision  in  13  Eliz. 
and  substantially  the  same  in  2  P.  8.  137,  §  1,  and  which  is 
declared  by  Lord  Mansfield  in  Cadogan  v.  Kcnnett,  Cowp. 
432-434,  to  be  a  principle  of  the  common  law,  viz.,  that 
all  conveyances  made  to  delays  hinder,  and  defraud  creditors 
shall  he  absohdely  void.  Tliis  difficulty,  however,  is  over- 
come in  Brashear  v.  West,  7  Peters,  608,  holding  that  such 
assignment  is  not  per  se  fraudulent,  and  that  the  right  to 
make  it  results  from  the  absolute  ownership  wliich  every 
man  claims  over  tliat  which  is  his  own.  Tlie  pressure  of  the 
difiiculty  has,  however,  been  felt  not  so  much  in  allowing 
insolvent  debtors  to  assign  their  property  to  pay  their  debts 
pro  rata,  because  bankrupt  and  insolvent  laws  accomplish 
the  same  thing,  but  in  permitting  them  to  assign,  and  so 


400       OBJECTS   OF   THE   DEBTOR   IN   MAKING   ASSIGNMENT. 

shape  the  trusts  in  tlic  instrument,  as  to  give  preferences  in 
tlic  distribution  of  their  property  to  some  creditors  over 
otliers.  That  doctrine,  however,  is  now  clearly  established. 
Mackic  v.  Cairns,  5  Cowen,  647. 

§  G70.  Tlie  assignment  being  the  act  of  the  assignor  alone 
it  has  been  made  something  of  a  question  whether  the  assent 
of  the  creditors  should  not  also  be  required.  That  of  the 
preferred  creditors  will  always  be  presumed.  So,  also,  as  to 
all  those  who  are  benefited  by  it.  Assent  may  be  given  at 
any  time,  and  receiving  any  thing  under  it  always  presumes 
it.  Li  the  State  of  New  York  it  is  not  held  necessary  that 
a  creditor  should  be  a  party  to  it,  or  signify  his  assent,  but 
the  assignee  must  consent  to  receive  it  and  to  enter  upon 
the  performance  of  the  trusts  created  by  it.  His  receipt  of 
it  without  objection  or  qualification  would  be  sufficient. 

QUESTIONS. 

What  assignment  is  here  intended  ?  Who  may  execute  such  assign- 
ment ?  What  is  the  rule  in  relation  to  partners  ?  What  assignment  can 
one  make  in  New  York  without  the  concurrence  of  the  others  ?  What 
the  rule  in  some  other  States?  What  the  rule  as  to  corporations? 
What  the  nature  and  effect  of  an  assignment  ?  What  is  the  position  of 
the  assignee  ?  What  is  the  diflficulty  which  an  assignment  had  to  con- 
tend with  ?    On  what  principle  overcome  ? 

PART  n. 

ITS  PE0VISI0X9  IX   EEFEEEXCE  TO  ITS  VALIDITY. 

§  671.  Tlie  provisions  contained  in  voluntary  assignments 
by  insolvent  debtors,  have  proved  a  very  fruitful  source  of 
litigation.  The  object  of  the  debtor  has  been  twofold  :  first, 
to  reserve  as  much  property,  or  power  over  property,  or 
means  of  subsisting  upon  it,  as  was  possible ;  and  second,  to 
make  use  of  the  assignment  as  a  coercive  force,  to  compel 
all  those  who  derive  any  benefit  under  it,  into  a  release  of 
all  their  claims  against  the  assignor,  as  the  condition  upon 
which  they  can  receive  such  benefit.    In  these  two  directions 


PE0VISI0N8  EENDEEmO  VOID  THE  ASSIGNMENT.  401 

will  be  found  the  lines  of  decision,  effectually  meeting  and 
restraining  all  efforts  for  the  accomplishment  of  this  twofold 
object. 

§  672.  The  first  question  arising  relates  to  the  right  of 
the  assignor  to  reserve  a  portion  of  his  property  fi-om  pass- 
ing under  the  assignment,  and  yet  leave  the  validity  of  the 
instrument  undisturbed.  lie  should  except  from  its  opera- 
tion all  those  articles  of  household  property  which  are  not 
liable  to  seizure  and  sale  under  execution,  ffhe  reservation 
of  other  j^roperty  would  not  affect  the  validity  of  the  assign- 
ment, but  it  would  not  then  be  a  general  one,  and  the  object 
of  the  assignor  in  removing  all  his  property  from  seizure 
and  sale  under  executions,  with  the  view  of  directing,  him- 
self, its  application,  ^ould  fail  to  be  accomj)lished.  The 
part  not  assigned  would  be  open  to  application  imder 
judgments  and  executions.  Carpenter  v.  JJndervjood,  19 
Ifew  York,  520. 

§  673.  But  it  13  quite  another  question  whether  the  as- 
signor can  be  permitted  to  secure,  in  the  assigned  property, 
any  right  or  interest,  or  whether  he  can  make  the  assignee 
his  trustee,  for  the  purpose  of  enabling  him  to  enjoy  the 
property,  or  any  part  of  its  income.  The  law  can  concede 
to  him  no  such  right,  and  any  siich  provisions  in  the  assign- 
ment would  render  the  whole  instrument  void.  Mackie  v. 
Cairns,  Ilojiklns,  373,  and  same  case  in  5  Cowcn,  547. 
Neither  can  the  assignor  be  permitted  to  insert  in  his  assign- 
ment a  doubtful  claim  of  his  wife,  giving  that  a  preference 
in  payment,  or  a  fictitious  claim,  with  a  view  of  himself 
reaping  the  full  benefit  of  it.  An  assignment  which  should 
embrace  any  such  attempts  to  secure  accruing  benefits  to 
the  assignor  would  render  utterly  void  the  assignment. 

§  674.  The  assignor  is  generally  very  desirous  of  selecting 
his  own  assignee,  as  he  may  hope  to  receive  many  favors 
from  his  friendly  disposition.  Tliis  he  may  do  witliin  certain 
limits.  The  usual  course  is  to  assign  to  the  creditor  who  is 
the  most  deeply  interested  in  the  assigned  property.  The 
26 


402  PROVISIONS  RENDEKINO  VOID  THE  ASSIGNMENT. 

only  restriction  wliicli  the  law  interposes  in  this  respect  is, 
that  the  assignee  shall  not  be  insolvent  to  the  knowledge  of 
the  assignor.  lie  shall  not  knowingly  place  his  property  in 
the  hands  of  a  man  who  is  utterly  incapable  of  responding 
to  creditors  for  any  damages  they  may  suffer  growing  out 
of  any  system  of  ftivoritism  of  which  he  may  have  received 
the  benefit.  Reed  v.  Emery ^  8  Paige^  41Y.  Browning  v. 
Hart^  6  Barh.  91-95.  The  question  has  further  been  pre- 
sented, whethef  in  case  the  assignee  appointed  should  wish 
to  resign,  a  right  can  be  reserved  in  the  assignment,  by  vir- 
tue of  which  the  assignor  can  exercise  the  power  of  aj)point- 
ing  another  to  act  as  a  substitute,  and  it  is  held  that  no  such 
right  can  be  reserved.  Plmik  v.  ScTiermerhom^  3  Barb. 
Chan.  644. 

§  675.  In  the  earlier  period  of  assignments,  and  before 
the  law  had  come  to  settle  clearly  their  provisions,  it  was  a 
common  custom  to  introduce  a  provision,  authoming  the 
assignee  to  sell  the  assigned  property  upon  credit.  There 
was  not  wanting  judicial  authority  to  sanction  this  custom. 
Bogers  v.  Be  Forest^  7  Paige,  272.  Such  a  provision  is  now 
regarded  as  vesting  a  discretion  in  the  assignee  by  the  in- 
strument itself,  and  which  he  might  greatly  abuse,  and  yet 
point  to  the  assignment  as  his  authority  ;  and  although  he 
may  undoubtedly  take  upon  himself  the  responsibility  of 
exercising  a  discretion  in  that  respect,  yet  it  must  be  upon 
his  own  responsibility,  and  if  given  in  the  instniment  will 
render  it  void.  Nicholson  v.  Leavitt,  2  Seld.  510.  So  far 
in  this  direction  have  the  courts  gone,  that  where  the  provi- 
sion was  that  the  assignee  should  convert  the  assigned  prop- 
erty into  money  or  available  means,  it  was  held  that  the 
conversion  into  available  means  was  equivalent  to  an  au- 
thority to  sell  on  credit,  and  hence  rendered  void  the  assign- 
ment. Brigham  v.  Tillinghast,  3  Kern.  215.  So  on  the 
directly  reverse  side  of  the  question  the  point  has  been  pre- 
sented, whether  a  restriction  contained  in  the  assignment  to 
sell /or  cash  only,  rendered  the  instrument  void,  and  it  was 


PEOVTSIONS  KEXDEEING   YOID  TIIE  ASSIGNMENT.  408 

held  tliat  it  did  not.  Carpenter  v. .  Underwood,  19  Nevj 
York,  620.  Upon  tlie  same  principle  it  is  incompetent  to 
provide  in  tlie  assignment  for  a  delay  of  sale  until  higher 
prices  may  be  obtained.    Hart  v.  Crane,  Y  Paige,  37. 

§  676.  As  these  instruments  are  often  required  to  be  exe- 
cuted with  very  little  delay,  the  assignpr  may  not  unfrc- 
quently  desire  to  execute  and  deliver  the  assignment,  thus 
placing  his  property  beyond  the  reach  of  being  applied  on 
executions,  and  at  the  same  time  to  reser\^  to  himself  tlie 
right  of  makuig  such  future  i)references  as  he  may,  upon 
more  mature  reflection,  deem  advisable.  This  the  law  will 
not  permit  him  to  do.  Averill  v.  Loucke,  6  Barh.  470. 
Neither  can  he  be  permitted  to  vest  in  his  assignees  the 
power  to  give  preferences  after  the  assignment  has  been 
executed  and  delivered.  Boardman  v.  Halliday,  10 
Paige,  223. 

§  677.  Another  question  in  relation  to  which  there  has 
been  a  diversity  of  decision,  relates  to  the  insertion  of  a 
provision  in  the  assignment  authorizing  the  assignee  to 
compound  with  the  creditors  of  the  assignor.  Such  a  provi- 
sion in  Illinois  renders  void  the  assignment.  Hudson  v. 
Maze,  3  Scamm.  578.  And  although  in  the  State  of  New 
York,  in  one  or  two  cases,  its  effect  has  been  considered 
questionable,  yet  the  point  has  been  presented  in  a  late  case, 
that  of  Bow  V.  Plainer,  16  N'ew  Yorlc,  562,  and  it  was  lield 
that  such  a  provision  did  not  render  void  the  assignment. 
An  assignment  once  made  should  be  irrevocable,  and  no 
right  exists  to  reserve  in  or  by  it  a  power  of  revocation. 
Biggs  V.  Murray,  2  John.  Chan.  565.  Same  case,  15  John. 
571. 

§  678.  Another  question  in  which  the  judicial  policy  of 
the  State  of  New  Yorlc,  as  proclaimed  in  its  higlicst  courts, 
has  experienced  a  change,  relates  to  what  kind  of  assignment 
can  be  made  by  a  manufacturer  who  is  compelled  to  make 
one  while  his  factory  is  in  full  operation,  and  his  stock  is  in 
all  the  different  stages  of  manufacture,  from  the  raw  mate- 


404  PROVISIONS   KENDEKING  VOID   THE  ASSIGNMENT. 

rial  wp  to  the  comj)leted  article.  The  point  here  is,  whether 
he  must  make  the  assignment  directing  an  immediate  sale 
of  all  his  effects,  including  the  stock  in  its  then  condition, 
when  very  little  would  be  likely  to  be  realized  from  it ;  or 
whether  he  may  authorize  the  assignee  to  work  up  the  stock 
on  hand,  and  if  necessary  to  make  purchases  of  any  mate- 
rials necessary  for  that  purpose,  and  to  reimburse  all  ex- 
penses thus  incurred,  from  the  avails  of  the  assigned  prop- 
erty. This  question  arose  in  Connecticut  in  Kendall  v. 
The  New  England  Carpet  Comjmny,  13  Conn.  383,  in 
which  it  was  held  that  such  an  authority,  under  such 
circumstances  contained  in  an  assignment,  did  not  render 
it  void.  The  same  doctrine  was  affirmed  in  the  Court  of 
Errors  in  the  State  of  New  York,  in  the  case  of  Cun- 
ningham V.  Freeborn^  11  Wend.  240.  But  in  the  late  case 
of  Dunham  v.  Waterman,  17  J^eio  York  Rep.  9,  this 
doctrine  is  overruled,  and  such  a  provision  declared  to  have 
the  effect  of  rendering  the  assignment  fraudulent  and  void, 
simply  in  virtue  of  this  provision.  The  tendency  for  some 
time  has  been  to  pronounce  such  assignments  void  where 
any  discretion  is  given  to  the  assignee  by  the  instrument. 
It  is  not  denied  but  what  the  assignee  himself  may,  if  the 
case  justifies  it,  exercise  such  a  power,  and  be  protected  by 
the  court,  but  if  so  he  must  do  it  upon  his  own  responsibil- 
ity, and  not  refer  to  the  assignment  as  his  authority.  The 
principle  as  now  settled  is,  "  that  a  debtor  who  makes  a 
voluntary  assignment  for  the  benefit  of  his  creditors,  may 
direct,  in  general  terms,  a  sale  of  the  property  and  collection 
of  the  dues  assigned,  and  may  also  direct  upon  what  debts 
and  in  what  order  the  proceeds  shall  be  applied,  but  beyond 
this,  he  can  prescribe  no  conditions  whatever  as  to  the 
management  or  disposition  of  the  assigned  property.  Li  all 
other  respects,  the  assignee  must  be  left  to  act  under  the  or- 
dinary rules  and  principles  which  apply  to  trustees  in  anal- 
ogous cases." 

§  679.  It  is  usual  in  the  making  of  assignments  to  attach 


PKOVISIONS  EENDEEmO  VOID  THE  ASSIGNMENT.  -105 

to  them  an  inventory,  containing  a  specification  of  the  prop- 
erty assigned,  describing  it  with  sufficient  accuracy,  and  also 
schedules  containing  lists  of  debtors  and  creditors,  and 
stating  the  amounts  due  from  and  to  each  respectively.  Tlie 
preferences  in  the  distribution  of  the  assigned  property  are 
generally  made  by  means  of  classifying  creditors  in  the 
schedules  thus  affixed.  Two  questions  have  here  arisen,  the 
jirst^  whether  such  inventory  or  schedule  must  be  affixed  to 
give  validity  to  the  assignment,  and  the  second^  whether,  in 
case  such  inventory  is  affixed,  the  assignment  can  convey 
any  property  not  specified  in  it.  The  first  is  answered  by 
the  case  of  Keycs  v.  Brushy  2  Paige,  311,  deciding  that  an 
absolute  assignment  of  all  the  assignor's  property  and  choses 
iii  action,  containing  a  provision  that  such  assignor  would, 
with  all  convenient  speed,  make  out  an  inventory  of  such 
property  and  choses  in  action,  and  which,  when  so  made 
out,  VMS  to  he  considered  a  part  of  the  assignment,  had  the 
effect  to  convey  a  present  interest  to  the  assignee,  and  that 
the  making  out  and  attaching  or  delivery  of  the  inventory 
was  unnecessary  to  give  validity  to  the  assignment.  It  "was  a 
mere  matter  of  evidence,  which,  if  not  done,  might  be  sup- 
plied in  some  other  way.  Tlie  second  is  answered  by  the 
case  of  Piatt  v.  Lott,  17  ^ew  York  Pej).  478,  holding  that 
where  there  is  an  assignment,  professing,  on  its  face,  to  be 
of  all  the  debtor's  property,  and  within  it  was  contained  the 
statement  that  said  property  was  to  be  "  more  fully  and  par- 
ticularly enumerated  and  described  in  a  schedule  annexed," 
passed  all  the  property  of  the  assignor,  whether  contained 
in  the  schedule  or  not. 

§  680.  The  extent  to  which  a  debtor  can  legally  go  in 
distributing  his  property  to  pay  debts  has  been  tested  in  the 
case  of  Murray  v.  Judson,  5  Seld.  73,  in  which  the  point 
of  in(piry  was,  whether  a  debtor  could,  in  his  assignment, 
direct  the  payment  of  a  debt  which  was  both  usurious  in  its 
inception,  and  also  embraced  in  a  judgment  irregularly  en- 
tered up.    It  was  held  that  there  was  no  legal  obligation 


406  TKOVISIONS   EENDEKING   VOID   THE   ASSIGNMENT. 

upon  tlio  debtor  to  avail  himself  of  the  statutes  against  usu- 
ry to  avoid  the  payment  of  a  debt  which  was  otherwise 
justly  due ;  and  as  to  the  irregularity  in  the  entering  up  of 
the  judgment,  that  being  a  defect  which  the  party  to  it  could 
only  take  the  advantage  of,  and  one,  therefore,  which  it  was 
in  his  power  to  waive,  that  could  present  no  obstacle  to  his 
directing  its  payment. 

§  681.  The  inquiry  may  be  made  as  to  the  effect  on  the 
whole  assignment  of  the  introduction  of  a  single  fraudulent 
provision  into  it,  and  the  answer  is  that  it  avoids  it  wholly, 
and  that  no  interest  passes  under  it  to  the  assignees  as 
against  any  creditor  not  assenting  to  it.  Goodrich  v.  Downs, 
6  mil.  438. 

§  682.  Another  question  which  is  one  of  vast  importancej 
and  which  has  led  to  much  diversity  in  decisions,  relates  to 
the  right  or .  power  of  the  assignor  to  assign  his  property 
under  such  restrictions,  limitations,  and  conditions  as  that, 
if  received  at  all  by  the  creditors,  it  shall  be  in  full  of  thek 
demands,  they  severally  executing  releases  of  their  debts. 
Unless  such  provision  is  introduced,  and  can  be  legally  sus- 
tained, the  effect  of  an  assignment  is  merely  to  transfer 
property  to  pay  debts,  in  the  order  in  which  it  is  directed, 
and  to  the  extent  to  which  it  will  go.  And  so  far  as  it  goes, 
it  operates  to  extinguish  the  debts,  leaving  any  balance  re- 
maining still  good  against  the  debtor  and  his  future  earnings. 
Tlie  question  here  presented  is,  how  far  can  such  debtor  be 
permitted  to  coerce  his  creditors  into  the  giving  of  releases 
as  a  condition  upon  which  they  are  permitted  to  receive  any 
of  the  property  assigned.  The  point  has  several  times  been 
presented  for  adjudication.  In  South  Carolina,  Niolan.  v. 
Douglas,  2  EilVs  Chan.  Bep.  443,  a  debtor  in  failing  circum- 
stances executed  an  assignment  of  his  whole  property  to 
trustees  in  trust  for  the,  benefit  of  all  such  creditors  as  should, 
within  six  months,  establish  their  demands,  accept  dividends, 
and  give  releases  in  full,  and  excluding  others  who  should 
refuse  to  comply.    A  bill  was  filed  by  a  creditor,  who  refused 


PROVISIONS  EENDEEING  VOID  THE  ASSIGNMENT.  407 

to  accept,  to  set  aside  the  deed  of  assignment  as  fraudulent 
and  void.  It  was  held  valid.  The  same  general  principle 
will  be  found  sustained  in  Liiypencott  v.  Barker^  2  Binney, 
174.  Halsey  v.  Whitjiey^  4  Mason,  206,  and  Brashear  v. 
West,  7  Peters,  608.  The  latter  case  holds  that  to  be  the 
doctrine  in  Pennsylvania.  But  a  different  judicial  policy  is 
adopted,  holding  that  the  introduction  of  such  a  coercive 
provision  will  avoid  the  assignment  in  the  States  of  Connec- 
ticut and  New  York.  In  the  former,  see  the  case  of  Lujror 
ham  V.  Wheeler,  6  Conn.  277.  In  the  latter,  the  question 
has  come  up  in  several  cases,  and  finally  went  to  the  Court 
of  Errors  in  the  case  of  Walceman  v.  Grover,  11  Wend.  187. 
In  the  latter  State,  however,  it  is  held  entirely  competent 
for  the  assignee  to  make  a  personal  agreement  to  procure 
the  debtor's  discharge  without  its  vitiating  the  assignment. 
Hastings  v.  Belknap,  1  Den.  190.  And  so,  also,  where 
there  is  an  exchange  of  notes,  a  provision  in  the  assignment 
directing  the  payment  of  one  note  provided  the  other 
is  given  up,  will  not  invalidate,  as  both  are  viewed  in  the 
light  of  one  transaction  and  one  debt.  Oliver  Lee  Bank  v. 
Talcott,  19  Neio  York  Rep.  146. 

§  683.  In  the  State  of  New  Tork,  an  assignment  may 
safely  be  pronounced  fraudulent  and  void,  where  it  either 
reserves  some  portion  of  the  assigned  property,  or  a  part  of 
the  interest  or  income  thereof,  to  the  use  of  the  debtor  or  his 
family  ;  or  directs  the  surplus,  after  jmying  certain  specified 
creditors,  to  be  returned  to  the  assignor,  leaving  other  debts 
unsatisfied,  as  in  Barney  v.  Griffin,  2  Comst.  365  ;  or  where 
it  imposes  terms  upon  the  creditors  as  conditions  upon  which 
they  are  to  participate  in  the  distribution  of  the  assigned 
property,  or  creates  any  trust  which  is  to  operate  by  way  of 
coercing  the  creditors  into  a  release  of  their  claims ;  or 
where  it  reserves  to  the  assignor  the  right  to  appoint  tho 
uses  to  which  the  property  is  to  be  applied  in  the  future ; 
or  where  it  postpones  to  a  future  period  the  sale  of  the  trust 
property  or  the  distribution  of  its  proceeds ;  or  where  it 


408  PKOVISIONS   KENDEKING  VOID  THE  ASSIGNMENT. 

exempts  tlic  assignee  from  responsibility  for  all  losses  sus- 
tained by  the  trust  property  not  occasioned  by  liis  gross 
negligence,  or  wilful  misfeasance,  as  in  Litchfield  v.  White, 
3  Seld.  438.  To  sustain  an  assignment  preferring  creditors, 
in  this  State,  it  must  be  absolute  and  unconditional,  must 
devote  tlie  assignor's  property  to  the  immediate  and  unqual- 
ified payment  of  his  debts  ;  must  contain  no  reservations  or 
conditions  for  the  benefit  of  the  assignor ;  and  must  be  free 
from  all  provisions  calculated  to  extort  from  the  fears  of  the 
creditor,  a  compromise,  discharge,  or  other  favor. 

QUESTIONS. 

"What  are  the  objects  of  the  debtor  in  making  voluntary  assignments  ? 
In  what  direction  are  found  the  lines  of  decision  ?  Can  the  assignor  re- 
serve from  passing  under  the  assignment  a  portion  of  his  property  with- 
out destroying  its  validity  ?  What  would  be  the  effect  of  such  reserva- 
tion ?  Can  the  assignor  secure  in  the  assigned  property  any  right  or 
interest,  or  make  the  assignee  his  trustee  for  any  purpose  ?  Can  he  insert 
in  the  assignment  a  doubtful  claim,  of  his  wife,  or  a  fictitious  claim, 
giving  it  the  preference  ?  Can  the  assignor  select  his  own  assignee,  and 
within  what  limits,  and  subject  to  what,  can  he  make  such  selection  ? 
Can  he  reserve  the  right  to  make  such  appointment  in  case  of  resigna- 
tion? Can  assignor  authorize  assignee  to  sell  assigned  property  on 
credit  ?  Can  he  authorize  assignee  to  convert  assigned  property  into 
money  or  available  means  ?  Can  he  restrict  assignee  to  sell  for  cash 
only  ?  Can  he  direct  delay  until  higher  prices  can  be  obtained  ?  Can  he 
reserve  the  right  to  make  future  preferences  ?  Can  he  vest  in  his  as- 
signees the  power  to  give  preferences  after  completion  of  the  assign- 
ment ?  Can  the  asssignee  be  authorized  to  compound  with  creditors  of 
assignor  ?  Can  a  manufacturer  make  assignment  and  direct  manufactory 
carried  on  by  assignee  with  assigned  property  ?  "What  is  the  rule  at 
present  as  to  prescribing  conditions  in  regard  to  management  or  disposi- 
tion of  assigned  property  ?  Must  assignor  attach  inventory  of  assigned 
effects  to  the  assignment,  or  schedules  containing  lists  of  debtors  and 
erditors  ?  By  what  means  are  creditors  generally  classified  with  a  view 
to  making  preferences  ?  Suppose  inventory  aflBsed,  can  assignment  con- 
vey any  property  not  specified  in  it  ?  Can  assignor  direct  in  his  assignment, 
the  payment  of  a  usurious  debt  ?  Can  he  du-ect  the  payment  of  a  judgment 
irregularly  entered  up  ?  "What  effect  on  the  whole  assignment  has  a  single 
fraudulent  provision  that  enters  into  it  ?    Can  the  assignor  annex  such 


EFFECT  OF  POSSESSION  OP  PEOPEETT  ON  CEEDIT.         409 

conditions  to  the  assignment  as  \nll  compel  his  creditors,  if  they  receive 
any  benefit  from  it,  to  execute  a  release  of  their  debts  ?  "What  effect 
if  assignee  make  a  personal  agreement  to  procure  the  debtor's  dis- 
charge ?  What  effect  if,  in  case  of  an  exchange  of  notes,  assignor  directs 
the  payment  of  one  only  on  condition  that  the  other  will  be  given  up  ? 
"What  are  the  provisions  any  one  of  which  in  the  State  of  New  York  be- 
ing introduced  into  an  assignment  will  render  it  void  ?  What  in  the  State 
of  New  York  is  necessary  to  sustain  an  assignment  preferring  creditors  ? 


PART  ni. 

DELIVEET  OF  PROPERTY  TO  ASSIGNEE,   AND  HIS  RIGHTS  AND  DmES. 

§  684.  The  law  always  regards  the  possession  of  personal 
property  as  'prima  facie  evidence  of  title.  A  man  being  tlic 
presumed  owner  of  the  personal  effects  in  his  possession,  is 
held  out  to  the  commimity  as  entitled  to  credit  to  the  extent 
of  such  property  as  he  may  thus  be  in  possession  of.  The 
question  then  comes  up  how  far  the  law  will  permit  a  man, 
really  insolvent,  to  make  a  valid  disposition  of  personal 
property  either  by  sale  or  assignment,  and  yet  continue  to 
retain  such  property  in  his  own  possession ;  and  thus  by 
holding  himself  out  to  the  community  as  its  owner,  be  ena- 
bled to  obtain  a  credit  upon  the  strength  of  it,  and  then, 
when  payment  is  sought  to  be  enforced,  defeat  his  creditor 
through  the  superior  title  of  the  party  to  whom  he  had  sold 
it.  Will  the  law  sanction  such  a  sale  or  assignment  under 
such  circumstances  ?  The  principle  was  settled  in  the  Star 
Chamber  as  early  as  the  reign  of  Elizabeth,  that  among 
other  indicia  of  fraud  was  the  remaining  in  possession,  and 
exercising  acts  of  ownership  over  goods  after  the  execution 
of  a  bill  of  sale  of  the  same  for  a  valuable  consideration. 
Twynes'  case,  3  Coke,  80. 

§  685.  It  has  never  been  doubted  but  that  such  attempted 
sale  or  assignment  was  a  badge  of  fraud,  and  might  afford 
sufficient  ^>r2W«  facie  evidence  of  it  to  avoid  the  sale, 
and  thus  render  the  property  liable  to  the  payment  of  those 
debts  presumptively  incurred  upon  the  strength  of  it.    But 


410     EFFECT  OF  POSSESSION  OIT  VAUDITY  OF  ASSIGNMENT. 

tlie  difRculty  lias  been  to  determine,  how  far  such  evidence 
should  be  j^ermitted  to  go  ;  whether  it  should  be  conclusive, 
and  thus  stop  the  parties  frbm  denying  the  existence  of  such 
fraudulent  intent  as  would  render  void  the  attempted  trans- 
fer ;  or  whether  it  should  rest  in  prwia facie  presumption, 
allowing  the  parties  implicated  to  disprove  the  fraudulent 
intent,  thus  opening  the  whole  transaction  for  investigation, 
and  rendering  it  a  question  of  fact  for  the  decision  of  a 
jurj.  The  latter  is  the  view  that  has  been  taken  of  it  in 
England.  Eastwood  v.  Brown,  1  Ryan  &  Moody,  312.  In 
this  country  the  Federal  Judiciary,  and  the  courts  of  Yir- 
ginia,  Kentucky,  and  Pennsylvania,  are  inclined  to  take  the 
view  first  mentioned.  In  Massachusetts,  Connecticut,  Maine, 
and  some  other  States,  such  possession  is  held  strong  'prima 
facie  evidence  of  fraud,  but  susceptible,  nevertheless,  of  an 
explanation  consistent  with  good  faith.  In  the  State  of  New 
York  there  has  been  some  diversity  of  decision,  but  there  is 
now  a  statutory  provision.  2  ^.  /&  136,  §  5.  The  general  doc- 
trine is  now  understood  to  be.  That  a  sale  or  assignment  of 
goods  by  a  failing  debtor,  to  be  valid  as  against  creditors,  must 
be  accompanied  by  an  actual  and  continued,  as  well  as  a  nomi- 
nal and  constructive  change  of  possession.  Butler  v.  Stod- 
dard, 7  Paige,  163.  Tlie  only  safe  course  to  be  pursued  is 
for  the  assignee  to  take  immediate  possession,  either  by  him- 
self or  his  agents,  and  to  retain  such  possession  until  the 
efi^ects  are  ultimately  disposed  of.  The  employment  of  the 
assignor  merely  as  agent,  where  in  the  exercise  of  such 
agency  iie  would  have  devolved  upon  him  the  possession 
and  control  of  the  assigned  effects,  could  not  be  done  with- 
out the  hazard  of  defeating  the  assignment. 

§  686.  An  assignment  is  only  fraudulent  and  void  as  to 
those  creditors  who  choose  to  question  its  validity.  In  re- 
gard to  its  immediate  parties,  the  assignor  and  assignee, 
where  the  latter"  has  accepted  the  trust,  and  also  to  all  such 
creditors  as  choose  to  take  advantage  of  its  provisions,  the 
assignment,  however  fraudulent  it  may  really  be,  is  a  valid 


DTTTT  AND  PEOTECTION   OF  THE  ASSIGNEE.  411 

and  binding  instrument.  Neither  one  of  these  parties  arc 
at  liberty  to  question  it.  The  only  party  who  enjoys  this 
liberty,  and  has  also  sufficient  interest  to  enable  him  to  do 
so,  is  the  creditor  who  refuses  to  acquiesce  in,  or  receive  any 
thing  under  the  assignment.    Ames  v.  Blunt,  5  Paige,  13. 

§  687.  It  follows  as  a  result  from  this  doctrine,  that  the 
assignment,  however  defective,  is  a  good  and  valid  instru- 
ment until  its  validity  is  called  in  question  by  the  proper 
party.  Tliis  may  never  be  done,  and  hence  the  possibility 
that  all  the  assignor's  property  may  be  disposed  of,  and  its 
avails  distributed,  under  an  assignment  so  very  defective  as 
not  for  one  moment  to  stand  before  a  judicial  tribimal.  Tlie 
fact  that  the  instrument  is  good  and  valid  until  questioned, 
not  only  authorizes,  but  renders  it  the  duty  of  the  assignee, 
to  take  immediate  possession  of  the  assigned  property,  and 
to  proceed  with  as  little  delay  as  possible  in  selling  and 
converting  the  same  into  money,  and  disposing  of  the  latter 
as  directed  by  the  instrument.  He  has  even  been  held 
guilty  of  a  breach  of  trust  if  he  delays  a  sale  for  the  pm-pose 
of  retailing  the  goods.     Hay^t  v.  Crane,  7  Paige,  398. 

§  688.  Such  being  the  plain  duty  of  the  assignee,  the 
law  will  protect  him  in  all  his  acts  done  in  good  faith  under 
the  assignment.  As  the  instrument  is  deemed  valid  until  a 
creditor,  by  filing  his  bill,  calls  it  in  question,  the  assignee 
has  the  benefit  of  that  validity,  and  cannot  be  charged  with 
the  proceeds  of  any  assigned  property  which  ho  may  have 
sold  and  converted  into  money,  and  distributed  among  pre- 
ferred creditors,  prior  to  the  exhibiting,  by  the  creditor,  of 
his  bill,  to  avoid  the  assignment.  Averill  v.  Zoucks,  6 
JBarh.  470. 

§  689.  A  creditor  who  designs  to  question  an  assignment, 
is  in  no  condition  to  do  so,  until  the  validity  of  his  claim  is 
legally  settled  by  a  judgment.  Tliis  being  obtained  at  law, 
and,  together  with  the  execution  issued  thereon,  being  a  lien 
upon  the  real  and  personal  estate  of  the  debtor,  entitles  him 
to  go  into  equity,  and  ask  to  have  any  fraudulent  assign- 


412  QUESTIONS. 

ment  under  which  the  debtor's  property  is  claimed,  set  aside, 
so  that  the  obstruction  may  be  removed,  and  he  left  at 
liberty  to  enforce  the  lieu  under  his  judgment  and  execu- 
tion.   Moliaiok  Bank  v.  AtwateVj  2  Paige,  54. 

QUESTIONS. 

IIo-w  does  the  law  regard  possession  of  personal  property  ?  IIow  is 
a  man  in  possession  of  effects  held  out  to  the  community  ?  "Will  the  law 
permit  an  insolvent  debtor  to  make  a  valid  disposition  by  sale  or  assign- 
ment of  personal  property,  and  yet  retain  the  possession  ?  What  has 
never  been  doubted  as  to  such  attempted  sale  ?  What  has  been  the 
diflBculty  ?  What  two  views  have  been  taken-  as  to  the  effect  of  such  an 
attempted  transfer  of  property  ?  How  regulated  in  the  State  of  New 
York  ?  What  is  the  general  doctrine  now  understood  to  be  ?  What  is 
the  only  safe  course  for  the  assignee  to  pursue?  Can  he,  with  any 
safety,  employ  the  assignor  ?  Against  whom  is  an  assignment  only  frau- 
dulent and  void  ?  How  is  it  as  to  its  immediate  parties,  assignor  and 
assignee,  and  to  such  creditors  as  choose  to  take  advantage  of  its  provi- 
sions ?  Who  is  the  only  party  who  is  at  liberty  to  question  it  ?  How 
long  is  an  assignment  a  good  and  valid  instrument  ?  May  it  possibly 
never  be  called  in  question  ?  What  does  the  fact  of  its  being  good  and 
valid  until  questioned,  require  and  render  the  duty  of  the  assignee  ? 
Wherein  has  he  been  guilty  of  a  breach  of  trust  ?  In  what  will  the  law 
protect  the  assignee  ?  When  cannot  an  assignee  be  charged  with  the 
avails  of  assigned  property  distributed  under  the  assignment  ?  What 
must  a  creditor  do  before  he  can  go  into  equity  and  question  an  assign- 
ment ?  What  does  the  judgment  and  esecution  issued  thereon  entitle 
him  to  do  ? 


•  BOOK  IV. 

EEMEDIES. 


CHAPTER   I. 

LIEN. 


PART   I. 

WHAT  IT   13,    ASH  TO  WHOil  APPLICABLE. 

§  690.  Lien  consists  in  the  right  to  detain  property  until 
the  price,  or  some  charge  which  is  due  on  it,  is  paid.  Thus 
defined,  it  imj^lies  that  the  property  i»  relation  to  which 
the  right  is  to  be  exercised,  is  in  the  possession  of  the  party 
claiming  its  exercise.  This  is  true  universally  as  to  all  liens 
at  common  law.  But  in  maritime  law  there  are  liens  exist- 
ing independently  of  possession,  either  actual  or  construc- 
tive. Thus  bottomry  bonds  give  liens  upon  foreign  ships  not 
in  the  possession  of  the  holder.  But  in  such  case  there  is  no 
.vested  lien,  nothing  but  what  is  inchoate,  conditional,  and  im- 
perfect, until  the  vessel  has  completed  its  voyage.  So,  also, 
liens  exist  in  equity  independent  of  possession.  Tlie  vendor, 
for  instance,  has  a  lien  upon  the  land  he  has  sold  for  the  unpaid 
purchase  money.  So,  also,  an  equitable  lien  may  be  created 
for  a  thing  not  at  the  time  in  existence,  but  which  is  soon  ex- 
pected to  come  into  it,  as  where  articles  arc  to  be  manufactured, 


414  WHO   AHE  ENTITLED   TO   LIEN. 

and  liens  given  in  advance  upon  them.  In  siicli  case  also  tlicro 
is  no  j)rescnt  vested  right,  but  the  liens  take  effect  and  become 
perfected  when  the  articles  come  to  exist.  The  rij^e  in  equity 
is  stated  as  a  clear  result  from  all  the  authorities,  "  that 
whenever  the  parties,  by  their  contract,  intend  to  create  a 
positive  lien  or  charge,  either  upon  real  or  upon  personal  prop- 
erty, whether  then  owned  by  the  assignor  or  contractor,  or 
not,  or  if  personal  property,  whether  it  is  then  in  use  or  not, 
it  attaches  in  equity  as  a  lien  or  charge  upon  the  particular 
property,  as  soon  as  the  assignor  or  contractor  acquires  a 
title  thereto  against  the  latter,  and  all  persons  asserting  a 
claim  thereto,  under  him,  either  voluntarily,  or  with  notice, 
or  in  bankruptcy."  Mitchell  v.  Winslow,  2  Story,  630,  638, 
64.  All  liens  are  at  best  but  qualified  rights.  They  are  not 
founded  on  property,  but  always  suppose  the  property  to  be 
in  some  other  person,  and  not  in  him  who  sets  up  the  right. 

§  691.  The  existence  of  the  lien  does  not  prevent  the 
party  entitled  to  it  from  pursuing  his  remedy  at  law,  and 
collecting  the  debt  or  charge  out  of  which  the  right  is  de- 
rived. When  goods  subject  to  a  particular  lien  are  in  part 
delivered,  the  question  may  arise  as  to  the  right  of  the  party 
in  possession  to  retain  the  part  undelivered,  and  whether  for 
the  whole,  or  what  portion  of  the  debt  or  charge.  The  rule 
is,  that  all  the  articles  undelivered  may  be  retained,  and 
held  to  secure  the  payment  for  all  the  labor,  skill,  or  expense 
laid  out  upon  the  whole,  under  the  same  contract,  between 
the  same  parties,  thus  constituting  one  debt.  MoFarland  v. 
Wheeler  ,  26  Wend.  467,  480. 

§  692.  Tlie  following  classes  of  persons  may  be  entitled 
to  their  right  of  lien. 

1.  Bailees,  who  perform  labor  and  services  upon  the 
thing  bailed,  at  the  request  of  the  bailor. 

2.  Innkeepers  have  a  lien  upon  the]  baggage,  for  the 
accommodations  of  the  guest. 

3.  Common  carriers  have  a  lien  upon  the  goods  carried 
for  the  amount  of  then-  freight. 


DUTEEENT  KESTDS  OF  LIEN.  415 

4.  Vendors  may,  under  some  circmnstances,  have  a  lien 
upon  the  goods  sold  for  tlio  payment  of  the  price. 

5.  Agents  or  factors  have  a  lien  upon  the  goods  of  their 
principals,  for  advancements  made  for  their  benefit. 

"Whoever  may  be  the  party  who  is  entitled  to  exercise 
this  right,  the  character  of  the  lien  is  always  essentially  the 
same. 

.  QUESTIONS. 

"WTiat  does  a  lien  consist  in  ?  "What  does  it  imply  ?  Cf  what  class 
of  liens  is  this  universally  true  ?  What  liens  may  exist  independent  of 
possession  ?  What  instance  ?  How  do  liens  exist  in  equity  ?  What  in- 
stance ?  What  are  instances  of  equitable  lien  ?  When  do  such  liens 
take  effect?  What  are  all  liens?  Are  they  founded  on  property? 
What  do  they  suppose  ?  What  is  not  prevented  by  the  existence  of 
lien  ?  When  goods  subject  to  a  particular  lien  are  in  part  delivered,  what 
is  the  right  of  the  party  in  possession  as  to  the  part  undelivered  ?  What 
classes  of  persons  are  entitled  to  the  right  of  lien  ?  Is  the  character  of 
the  lien  always  essentially  the  same  ? 

PAET  n.  * 

ITS  VAEIETIES  AND  MODES   OF  ACQUISITION'. 


§  693.  Liens  in  whatever  way  acquired,  are  of  two  kinds, 
particular  or  special,  and  general.  Tlie  first  give  only  a 
right  to  retain  the  particular  thing  in  relation  to  which  the 
lien  exists.  The  bailee  may  retain  the  article  upon  which 
his  labor  was  expended,  the  common  carrier  the  goods  he 
has  transported,  and  the  vendor  the  articles  of  property  he 
has  sold.  This  kind  of  lien  is  favored  by  the  law,  and  con- 
strued liberally.  Its  existence  is  not  aifccted  1»y  the  efflux 
of  time  since  the  debt  or  charge  giving  it  came  into  existence. 
Such  debt  or  charge  may  be  barred  by  the  statute  of  limita- 
tions, and  yet  the  lien  remain  perfect.  Tlie  thing  itself, 
being  m  the  possession  of  the  party  claimmg  the  right,  will 
eficctually  secure  its  continuance  until  payment  of  the  debt 
or  charge.  So,  also,  will  the  law  protect  it  not  only  against 
the  o-svner,  but  also  his  creditors,  and  will  not  permit  it  to 
be  seized  and  sold  under  executions  issued  on  judgments 


416  OEIGIN  OF  PAHTICITLAB  LIENS. 

oLtaincd  by  tlie  latter  against  the  former,  except  subject  to 
tlie  lien.  The  general  liens  are  those  that  are  claimed  in 
respect  of  a  general  balance  of  accounts.  These  belong  more 
to  factors  or  agents  than  to  any  other  class,  being  claimed 
by  them  on  a  general  balance  of  account  against  their  prin- 
cipals. These  are  not  favored  by  the  law,  and  are,  there- 
fore, always  subject  to  strict  rules  of  construction. 

§  694.  From  the  origin  of  the  common  law,  there  have 
always  existed  classes  of  persons,  who  were  compelled  by 
its  policy  to  receive  goods  for  certain  purposes,  and  to  render 
to  them,  or  their  owner,  certain  services.  The  innkeeper 
and  the  common  carrier  both  afford  illustrations  of  this  class. 
Both  these  offering  to  the  public  to  perform  the  services 
appropriate  to  each,  are  bound  by  acceptances  of  their  offer, 
so  far  as  their  means  and  accommodations  extend.  The  law 
could  not  well  devolve  upon  them  this  obligation  of  receiv- 
ing and  rendering  service,  without,  at  the  same  time,  giving 
them»extraordinary  remedies.  This  is  done  by  the  gift  of 
lien ;  the  carrier  being  entitled  to  retain  the  goods  he  had 
transported  until  paid  his  freight,  and  the  innkeeper  the 
baggage  and  goods  of  his  guest,  until  paid  for  his  accommo- 
dations. This  was  probably  the  origin  of  all  particular 
.  liens,  and  will  now  serve  to  explain  some  apparently  anoma- 
lous cases,  otherwise  difficult  of  explanation.  The  lien  of 
an  'innkeeper,  on  property  intrusted  to  his  charge,  only 
exists  where  the  party  owning  the  property  was  a  guest ;  and 
where  horses  are  sent  to  an  inn,  to  be  kept  for  a  person  not 
a  guest,  the  innkeeper  has  no  lien  on  them  for  his  charge  of 
keejDing.  Grinnel  v.  Cook^  3  Hill^  485.  He  is  in  this  re- 
spect on  the  same  footing  as  a  livery  stable  keeper. 

§  695.  A  distinction  has  also  been  taken  of  this  descrip- 
tion, that  where  a  party  has  bestowed  labor  and  skill  upon 
an  article,  and  by  these  means  essentially  changed  its  prop- 
erties and  its  character,  he  has  a  lien  on  it  for  his  charge. 
An  instance  of  this  would  be  a  trainer  of  a  race-horse,  in 
which,  by  his  instruction,  he  works  a  marked  imj^rovement 


OEIGIN   OF   PAETICULAE   LIENS.  417 

in  the  cliaracter  and  capabilities  of  the  animal.  But  the 
rule  stops  with  this  change  of  properties  and  character,  and 
does  not  extend  to  the  expenditure  of  labor  and  money  on 
the  article  claimed  to  be  retained,  but  "which  produces  no 
alteration  in  it.  Thus  a  livery  stable  keeper  has  no  lien  on 
the  horse  for  its  keep.  The  distinction  here  is  pointed  out 
in  the  two  cases  of  Wallace  v.  Woodgate^  Ryan  cfc  Moody^ 
293,  and  Bevan  v.  Waters^  Moody  <&  Malkin,  236,  the  one 
allowing  the  right  of  lien,  the  other  denying  it.  That  is, 
"  that  in  the  case  of  the  livery  stable  keeper,  Avho  does  noth- 
ing to  the  horse  except  supplying  him  with  hay  and  oats, 
there  is  no  lien,  but  where  work  is  done  by  training  a  horse, 
there  is  a  right  of  lien.  In  case  of  a  livery-stable  keeper 
who  dressed  a  horse,  if  the  claim  for  dressing  could  be  sepa- 
rated in  that  respect,  there  might  be  some  right  of  lien,  but 
if  an  entire  claim,  compounded  of  feeding  and  dressing,  is 
set  up,  it  must  attach  to  both  ;  the  trainer  probably  claimed 
for  nothing  but  training,  and  so  his  claim  was  allowed." 
The  two  principles,  therefore,  upon  which  the  common  law 
right  of  lien  may  reasonably  rest,  are  twofold. 

1.  Where  the  party  to  whom  it  is  given  is  compellable 
to  receive  the  property  either  for  the  purpose  of  carriage  or 
safe  custody,  or  for  any  other  legal  purpose,  and, 

2.  When  such  party  has,  by  his  own  capital  or  labor, 
changed  the  quality  or  properties  of  the  thing  at  the  instance 
or  request  of  the  owner.  In  such  case  his  own  labor  has 
entered  into,  and  so  combined  with,  the  thing  itself,  as  to 
give  him  an  interest  in  it. 

§  696.  Tlie  question  has  several  times  arisen  as  to  the 
rights  of  an  innkeeper  and  common  carrier  to  retain  prop- 
erty, as  against  the  owner,  which  had  been  confided  to  them 
by  a  thief  to  keep,  or  to  transport,  in  the  course  of  their 
business.  Tlie  elementary  writers  or  some  of  them  may  be 
found  asserting  that  where  a  common  can-ier,  without  any 
knowledge  or  suspicion  of  wrong,  receives  goods  from  a 
thief  to  transport,  and  carries  them  accordingly,  he  is  enti- 
27 


418  WUEN   OWNER  OBLIGED  TO  DISCHAiiGE  LIEX. 

tied  to  retain  them  for  the  price  of  carnage  against  the  claim 
of  the  true  owner.  Tliis  assertion  rests  mainly  or  entirely 
on  the  authority  of  a  nisi  prius  case  which  has  never  been 
reported,  but  is  referred  to  by  Lord  Holt  in  YorTce  r. 
Greenough,  2  Ld.  Raymond^  866,  as  the  case  of  the  Exeter 
carrier^  in  which  such  right  was  recognized  on  tlie  alleged 
ground  that  the  carrier  was  obliged  to  receive  the  goods, 
and  should  therefore  be  entitled  to  his  lien.  The  right  of 
demanding  his  pay  in  advance,  as  a  compensation  for  the 
obligation  to  receive,  seems  to  have  been  overlooked.  Tlie 
same  doctrine  was  incidentally  recognized  in  King  v. 
Richards^  6  Wliart.  418.  But  the  general  understanding  of 
the  law  now  is,  that  no  such  right  exists  in  the  carrier,  and 
in  this  country  that  point  has  been  several  times  so  decided. 
Fitch  V.  Newbury^  1  Doug.  1.  BusMrlc  v.  Perrin,  2  Hall.) 
561.  Robinson  v.  JBaker,  5  Gush.  137.  But  in  the  case  of 
an  innkeeper  a  different  result  has  been  amved  at.  He  has 
been  held  entitled  to  his  lien,  as  against  the  claim  of  the 
owner,  if  the  horse  was  brought  to  the  inn  by  a  thief,  and 
he  had  kept  it  without  any  knowledge  or  suspicion  of  wrong. 
Blaclc  V.  Brennan,  5  Dana,  312.  3  Hill,  490.  The  two 
cases  arc  distinguishable  in  this,  that  it  is  clearly  for  the 
benefit  of  the  owner  to  have  the  horse  kept  by  the  innkeep- 
er, as  it  preserves  the  horse  in  life  for  his  future  use,  and 
hence  he  is  here  held  liable  to  pay.  But  it  is  not  for  his 
interest  to  have  his  property  transported  by  the  carrier  into 
a  distant  part  of  the  country-,  and  he  is  not,  therefore,  com- 
pelled to  pay  for  its  carriage  before  recovering  it  of  the 
carrier. 

§  697.  No  lien  can  exist  in  favor  of  the  vendor  or  bailee 
without  the  existence  of  a  present  debt  or  charge,  and  any 
suspension  of  the  right  to  demand  immediate  payment,  de- 
stroys the  lien.  The  giving  of  credit  to  the  vendee,  the 
taking  of  a  promissory  note  on  time,  or  an  agreement  that 
the  goods  may  be  taken  immediately,  each  constitutes  such 
a  suspension,  as,  for  the  present,  to  destroy  the  lien.     There 


LIEN   OF   FACTOK   OR   AGENT.  419 

is,  then,  no  debt  due  until  the  expiration  of  the  credit,  or 
maturity  of  the  note.  If,  in  the  mean  time,  the  vendor  retain 
the  possession,  and  the  goods  remain  with  him  until  the 
credit  expires,  or  the  note  falls  due,  and  the  price  still  re- 
mains unpaid,  the  right  of  lien  revives,  the  same  as  origi- 
nally possessed.  Equity  will  under  certain  circumstances 
create  a  lien  where  none  existed  at  law  ;  as  when  by  jnistake 
of  the  attorney  a  judgment  was  not  docketed  in  a  county, 
so  as  to  make  it  legally  a  lien  upon  the  real  estate  lying 
therein,  but  such  real  estate  was  afterwards  sold,  and  the 
judgment  debtor  and  the  purchaser  both  supposing  the 
judgment  to  be  a  valid  lien,  the  latter  undertook  to  pay  it, 
making  it  a  part  of  the  consideration  of  the  purchase.  The 
debtor  became  insolvent,  and  the  judgment  turned  out  to  be 
for  a  larger  amount  than  had  been  represented  to  the  pur- 
chaser at  the  time  of  the  purchase.  Finding  it  had  not  been 
made  a  legal  lien,  and  was  for  a  larger  amount,  he  declined 
paying  it,  but  the  court  decreed  its  payment.  IlaverUy  v. 
Becker^  4  Comst.  1G9. 

§  698.  The  factor  or  agent  has  a  general  lien,  which  gives 
him  a  riglit  to  continue  possession,  not  only  for  demands 
specifically  arising  out  of  the  thing  retained,  but  also  for 
the  general  balance  of  accounts  in  respect  of  all  dealings 
of  the  like  nature.  Tliis  not  only  covers  charges  upon  the 
particular  goods,  but  includes  also  all  advances  made,  and 
responsibilities  incurred,  in  the  execution  of  his  agency.  All 
moneys  actually  disbursed  on  account  of  the  goods  of  his 
principal,  and  all  acceptances  paid,  or  even  outstanding,  and 
not  yet  due,  come  under  this  principle.  One  question  here 
arises  relating  to  what  extent  this  lien  can  be  specifically 
exercised  ;  whether  it  extends  over  all  the  principal's  prop- 
erty in  the  hands  of  tlie  agent,  so  that  he  would  be  entitled 
to  hold  tlic  wliolc  for  that  purpose  ;  or  whctlier  he  is  bound 
to  restrict  it  to  just  what  will  secure  him  on  liis  general 
balance,  leaving  the  rest  at  liberty  to  be  disposed  of.  In 
Jolly  V.  Blanchard,  1  Wash.  252.   "Washington,  Justice,  says, 


420  LIEN  BY  AGREEMENT  OF  PARTIES. 

he  might  have  retained  such  part  of  the  goods  as  would  have 
been  sufficient  to  secure  him,  or  have  consigned  the  whole 
to  his  friend  here,  to  deliver  them  up  on  being  paid  what 
was  due.  Such  a  lien  is  not  limited  to  the  goods,  but  ex- 
tends, also,  and  covers  the  proceeds  and  securities  received, 
in  the  regular  course  of  business,  upon  their  sale.  Their 
avails  come  to  occupy  the  place,  and  be  subjected  to  the 
same  lien  or  charge,  as  the  goods  themselves. 

§  699.  There  are  other  sources  of  lien  besides  the  com- 
mon law.  One  of  these  is  to  be  found  in  the  agreement  of 
the  parties.  As  parties  have  the  control  of  then-  own  prop- 
erty, and  their  own  business,  they  can,  by  agreement  with 
each  other,  either  avoid  or  create  a  lien  just  as  they  may 
prefer.  For  the  establishment  of  such  a  lien,  a  positive 
agreement  is  not  always  required.  A  mere  notice  brought 
home  to  the  other  party  may  be  sufficient.  Thus  where  at 
a  public  meeting  of  a  number  of  dyers,  pressors,  &c.,  an 
agreement  was  entered  into  that  they  would  not  receive  any 
more  goods  to  be  dyed,  except  upon  condition  that  they 
should  have  respectively  a  lien  on  those  goods  for  their  gen- 
eral balance.  It  was  held  good,  and  that  any  one  who,  after 
notice,  delivers  goods  to  either  of  these  persons,  must  be 
considered  as  having  assented  to  those  terms,  and  hence  de- 
livers them  subject  to  such  lien.  Kirkman  v.  Shawcross,  6 
T.  H.  14.  It  was  formerly  thought,  that  where  parties  had 
made  with  each  other  a  special  contract,  providing  therein 
for  the  payment  of  a  fixed  sum,  all  right  of  lien  was  im- 
pliedly abandoned.  But  this  doctrine,  on  a  more  thorough 
examination,  in  Chase  v.  Westinore,  5  M.  d:  Selw.  180,  and 
in  Pinney  v.  Wells,  10  Conn.  104,  was  entirely  repudiated, 
and  the  rule  declared  to  be,  that  a  lien  may  exist  although 
there  is  a  special  contract.  The  mere  fact,  therefore,  that 
there  is  a  special  contract,  will  not  destroy  the  right  of  lien, 
unless  there  is  some  provision  in  it  inconsistent  with  such 
right.     An  agreement  which  stipulates  for  payment  in  a 


LIEN  EXISTING  BY  TSAGE.  421 

particular  manner,  and  out  of  a  particular  fund,  might  be 
held  inconsistent  with  the  right  of  lien. 

§  700.  So,  also,  liens  may  be  created  by  usage.  Tliese  re- 
pose upon  an  implied  contract.  Tlie  usage  out  of  which  they 
grow  is  either  the  common  usage  of  trade,  or  that  of  the 
parties  themselves  in  their  previous  dealings  with  each 
other.  An  attorney  or  solicitor  has  a  lien  for  the  general 
balance  of  his  account  arising  out  of  his  professional  busi- 
ness, and  this  lien  attaches,  not  only  to  all  moneys  he  may 
have  collected  for  his  client,  but  also  to  all  papers  of  his, 
which  he  may  have  in  possession.  Stevenson  v.  Blakdock^ 
1  M.  &  S.  535.  Another  instance  is  presented  in  forwarding 
merchants,  who  have  made  advances  for  charges  on  goods 
consigned  to  them  for  transportation  and  delivery  to  the 
ultimate  consignee  or  owner.  Advances  so  made  give  them 
a  lien  upon  the  goods,  and  the  right  to  recover  against  a 
third  person  to  whom  the  carrier  has  wrongfully  delivered 
them.  Fitzhugh  v.  Wiman,  5  Selcl.  559.  So  also  bankers, 
having  advanced  money  to  customers,  have  a  lien  upon  all 
securities  belonging  to  such  customers,  that  come  into  their 
hands,  for  their  general  balance.  But  where  a  security  is 
pledged  for  a  specific  sum,  they  cannot  apply  that  to  a 
general  balance.  The  rule  is,  that  where  money  is  advanced 
by  them  to  a  customer  upon  general  account,  they  have  a 
lien  for  the  amount  of  any  balance,  upon  all  securities  in 
their  possession,  belonging  to  such  customer ;  but  if  the 
banker  make  an  advance  upon  the  specific  security  of  any 
particular  bill,  he  thereby  elects  to  abandon  his  general  lien, 
and  to  resort  to  that  security  alone,  and  therefore  cannot  be 
justified  in  retaining  any  other  securities  to  provide  for  the 
possible  event  of  that  one  bill  being  dishonored.  Bosan- 
quet  V.  Dudman^  1  Starli.  1.  Bank  of  Mctrojyolls  v.  Kew 
England  BanJc,  6  How.  212.  Tlie  law,  however,  in  relation 
to  some  instances  of  this  species  of  lien,  cannot  be  considered 
as  entirely  settled,  whether  it  is  to  depend  upon  general  or 
special  usage  and  custom ;  as,  in  regard  to  wharfingers,  a 


4:22  KO   LIEJSr    FOK    UNLIQUIDATED   DAMAGES. 

court  lias  remarked  that  tlierc  may  be  a  usage  in  one  place 
varying  from  that  wliich  prevails  in  another.  Jlolderness 
V.  Collinson,  ^  B.  &  G.  212.  In  many  cases,  therefore,  a 
party  who  seeks  to  hold  goods  for  a  general  balance,  should 
be  prepared  to  prove  a  special  usage  to  that  effect,  applica- 
ble to  his  case.  But  this  lia^  no  application  to  agents  or 
factors,  whose  lien  for  a  general  balance  rests  upon  general 
custom.  But  such  agent  or  factor  cannot  enforce  a  lien  for 
debts  wdiicli  accrued  before  his  character,  as  such,  com- 
menced. Tlie  lien  of  the  common  earner  is  particular  or 
special,  upon  tbe  goods  he  carries  for  their  carriage.  It  has 
been  of  late  years  a  good  deal  discussed  wbether  they  have 
not  also,  by  the  usage  of  trade,  a  general  lien,  or  a  lien  for 
the  general  balance  of  their  account  against  the  owner.  The 
enforcement  of  their  special  lien,  in  all  cases,  would  leave 
no  occasion  for  the  exercise  of  a  general  lien.  It  is  gene- 
rally considered,  that  to  entitle  himself  to  a  general  lien,  be 
must  prove  a  usage,  so  general,  and  prevailing  to  such  an 
extent,  as  that  all  parties  contracting  may  be  supposed  to 
know  it,  and  to  contract  in  reference  to  it,  and  then  it  may 
fairly  be  said  to  form  a  part  of  the  contract. 

§  YOl.  A  lien  cannot  be  claimed  to  secure  the  payment 
of  unliquidated  damages,  arising  from  the  breach  of  a  con- 
tract ;  and  hence  when  the  freighter  of  a  ship  covenanted 
that  if  she  should  not  be  fully  laden,  he  would  not  only  pay 
for  the  goods,-  but  for  so  much  also  in  addition  as  the  ship 
would  have  carried,  for  which  he  had  before  stipulated  to 
pay  freight  according  to  the  dijfferent  rates  for  three  descrip- 
tions of  goods  ;  it  was  held  that  the  ship  oT^mer  had  no  lieu 
upon  the  goods  actually  on  board  for  the  amount  of  dead 
freight,  or,  in  other  words,  for  the  compensation  in  damages, 
to  which  he  was  entitled  for  the  freighter's  breach  of  con- 
tract in  not  putting  a  full  lading  on  board,  the  same  being 
unlicpiidated.     Pliili])  v.  Hodie,  15  East.  547. 

§  703,  The  debt  in  reference  to  which  the. lien  is  claimed 
must  be  due  to  such  claimant  in  his  own  right,  and  not  as 


QUESTIONS.  423 

the  agent  or  representative  of  another.  The  master  of  a 
ship  has  no  lien  upon  it  for  money  expended  in  the  payment 
of  demands  for  repairs,  either  at  home  or  abroad.  But  he 
may  hypothecate  the  ship  for  such  repairs,  in  the  course 
of  a  foreign  voyage,  and  tlius  give  a  lien  to  another,  although 
he  cannot,  by  payment,  transfer  it  to  himself. 

QUESTIONS. 

How  many  kinds  of  lien?  What  are  they?  "What  rights  given  by 
each  ?  What  cliaracteristics  of  the  particular  or  special  lien  ?  What  of 
the  general?  To  whom  does  the  latter  belong?  What  classes  of  per- 
sons are  compelled  to  receive  goods  ?  What  does  the  law  give  them  in 
the  way  of  compensation  ?  What  is  the  rule  where  a  party  has  be- 
stowed labor  and  skill  upon  an  article,  and  changed  its  properties  and 
character?  What  the  difference,  in  this  respect,  between  an  innkeeper 
and  a  livery  stable  keeper  ?  What  are  the  two  principles  upon  which 
the  common  law  right  of  lien  rests  ?  What  are  the  rights  of  an  inn- 
keeper and  a  common  carrier  to  retain  property  in  their  possession,  as 
against  the  owner,  which  they  have  received  and  kept  and  carried  for  a 
thief?  What  is  the  reason  of  the  diflferenco  of  the  rule  as  between  the 
two  ?  What  is  essential  to  a  lien  in  favor  of  vendor  or  bailee  ?  What  effect 
has  suspension  of  payment?  What  the  giving  of  credit  or  taking  a  note 
on  time?  What  result  after  term  of  credit  expires?  What  kind  of  lien 
has  the  factor  or  agent  ?  What  does  this  cover  ?  How  far  can  this  lien 
be  specifically  exercised  ?  Does  it  cover  the  whole  property,  or  only  a 
part  ?  What  other  sources  of  lien  besides  the  common  law  ?  What  can 
establish  it  by  agreement  of  parties?  How  established  by  notice? 
What  illustration  ?  What  effect  has  special  contract  in  destroying  lien  ? 
AVhat  kind  of  special  contract  would  have  that  effect  ?  How  is  lion 
created  by  usage  ?  On  what  does  it  repose  ?  What  lion  has  an  attorney 
and  solicitor,  and  on  what,  and  for  what  ?  What  lien  have  bankers,  and 
on  what,  and  for  what  ?  How,  where  security  is  pledged  for  special 
sum  ?  How  does  that  affect  general  balance  ?  What  the  general  rule 
stated  ?  What  is  the  safe  course  for  parties  claiming  to  hold  for  general 
balance  to  pursue  ?  What  is  the  lien  of  the  common  carrier  ?  What 
must  he  do  to  entitle  himself  to  a  general  lien  ?  Can  lion  bo  claimed  to 
secure  unliquidated  damages  arising  from  breach  of  contract?  What 
illustration  ?  To  whom  must  debt  bo  duo  when  lien  is  claimed  ?  Does 
master  of  a  ship  have  lien  for  repairs  ?  How  can  he  give  lien  for  such 
repairs  to  another  ? 


424  now   LIEN    MAY   BE   LOST. 


PART    III. 
now   LIEN  MAT  BE  LOST. 

§  703.  The  general  principle  here  is,  that  the  lien  ceases 
when  the  possession  is  voluntarily  relinquished.  As  the 
exercise  of  the  right  depends  on  the  possession,  it  follows 
that  any  voluntary  surrender  destroys  the  right.  The  sur- 
render, however,  must  be  voluntary  and  free  from  fraud, 
and  lience  where  a  common  carrier  was  induced  to  deliver 
goods  to  the  consignee,  by  a  false  and  fraudulent  promise 
made  by  the  latter,  that  he  would  pay  the  freight  as  soon  as 
the  goods  were  received,  and  then  refused  to  do  so ;  it 
was  held  that  he  might  recover  them  of  the  consignee  by 
action  of  replevin.  Bigelow  v.  Heaton,  6  Ilill^  43.  But 
any  change  of  the  character  in  which  the  party  claiming 
holds  them,  if  voluntarily  made,  results  in  the  loss  of  the 
right.  Thus  a  party  having  a  lien  on  goods,  causes  them 
to  betaken  in  execution  at  his  own  suit,  and  purchases  them  in 
on  the  sale.  In  such  case,  although  the  goods  may  never 
have  left  the  premises,  yet  the  nature  of  the  possession,  and 
tJie  character  of  his  claim,  are  so  altered  by  this  voluntary 
act,  that  liis  former  right  of  lien  is  gone.  Jacobs  v.  Laiour,  5 
Bingh.  130.  Having,  in  such  case,  voluntarily  destroyed 
his  right  of  lien,  he  would  be  powerless  in  protecting  the 
goods  against  a  lien  acquired  by  another  which  was  prior  to 
his  own  execution,  but  subsequent  to  his  own  original  right. 

S  Y04.  "Where  a  ris-ht  of  lien  exists,  and  is  intended  to 
be  relied  upon  by  the  party  owning  it,  he  should  distinctly 
assert  it,  whenever  he  intends  to  rely  upon  it.  If,  when  the 
goods  are  demanded  of  him,  he  claims  to  retain  them  on 
some  other  ground,  never  mentioning  his  lien,  he  is  con- 
sidered as  having  waived  it,  and  the  owner  of  the  goods  may 
sue  him  and  recover,  without  having  first  tendered  to  him 
the  amount  of  his  lien.  Saltus  v.  Everett,  20  We7id.  267. 
If,  however,  there  be  a  mere  omission  to  assert  his  lien,  that 


WHEN  EQUITABLE  SUPEEIOK  TO  JUDGMENT  LIEN.        425 

would  not  probably  amount  to  a  waiver.  Somctliing  is  re- 
quired beyond  this,  that  is,  the  resting  of  liis  claim  dis- 
tinctly upon  some  other  ground.  WJdte  v.  Garner^  2 
Bimjh.  23.  Tliere  is,  also,  a  good  deal  of  question  whether 
he  is  not  bound  to  assert  the  precise  lien,  and  if  he  claims 
one  of  too  large  a  description,  he  may  peril  his  entire  right, 
although  he  may  really  possess  one  of  a  narrower  character. 
Saunderson  v.  Bell^  2  C.  c&  If.  304.  But  this  principle  is  not 
uniformly  acquiesced  in.    Scarf e  v.  Morgan^  4  M.  &  TF.  270. 

§  705.  Tlierc  sometimes  occurs  a  conflict  between  the 
lien  which  exists  under  a  judgment,  and  the  equitable  rights 
which  ma;^  previously  have  been  acquired  by  a  purchaser  ; 
as  where  he  has  previously  made  a  contract  to  purchase  the 
property  which  is  subsequently  bound  by  the  judgment.  In 
such  a  conflict  the  lien  of  the  judgment  must  yield  to  the 
equitable  rights  of  the  purchaser,  and  the  docketing  of  it  is 
held  to  be  no  notice  to  him,  nor  docs  it  invalidate  his  subse- 
quent payments  on  the  contract  to  the  judgment  debtor, 
made  in  good  faith,  and  without  actual  notice  of  the  judg- 
ment. Meyer  v.  Ilhwian^  3  Kern.  1S6.  But  the  rule  is 
different  where  an  equitable  lien  is  agreed  to  be  given  to  se- 
cure an  antecedent  indebtedness  ;  as  where  A  is  the  holder 
of  a  mortgage,  and  the  premises  being  about  to  be  sold 
under  his  decree  of  foreclosure,  he  agrees  with  his  creditor 
B  to  execute  to  him  a  mortgage  on  the  land  within  ten  days 
after  he  should  so  acquire  the  title,  and  the  agreehient  thus 
made  was  carried  into  execution.  But  anotlicr  creditor  of 
A  had  obtained  and  docketed  a  judgment  against  him  be- 
fore the  agreement  was  made.  The  latter  was  adjudged  to 
have  the  prior  lien.     Dwight  v.  Neiocll,,  3  Comst.  185. 

§  70n.  A  vendor  of  real  estate  has  an  cquita1)le  lien  for 
the  purchase-money  upon  the  property  sokl.  The  limita- 
tion of  that  lien  is  that  it  only  exists  when  he  has  no  other 
security.  Tlie  taking  of  any  security  from  the  purchaser 
annihilates  it.  Even  when  such  vendor  takes  security  from 
a  third  person  for  the  purchase-money,  the  equitable  lien  is 


42  G  RIGHT   OF  LIEN   MAT  BE  WAIVED. 

gone.  Vail  v.  Foster,  4  Comst.  312.  Tliis  principle  Las  u 
more  extcndod  application,  and  embraces  all  cases  where 
secm'ity  is  taken  for  a  debt,  sucli  security  being  payable  at  a 
distant  day.  The  lien  is  inevitably  gone.  Small  v.  Moats^ 
9  Binrjli.  574.  A  question  has  arisen  whether  the  assignee 
of  a  bond  and  mortgage,  who  holds  the  same  as  security  for 
a  loan,  can  have  his  lien  extinguished  by  a  settlement  be- 
tween the  mortgagor  and  mortgagee,  in  good  faith  on  the 
part  of  the  latter,  who  executes  to  the  former  a  discharge 
of  the  bond  and  mortgage.  The  principle  settled  is,  that 
the  land  so  conveyed  continues  subject  to  the  mortgage  in 
the  hands  of  the  assignee,  that  the  non-producfion  of  the 
bond  and  mortgage  on  the  settlement,  should  have  been 
deemed,  by  the  mortgagee,  a  circumstance  sufficiently  sus- 
picious to  put  the  mortgagor  upon  inquiry,  and  thus  to 
charge  him  with  notice  of  the  actual  state  of  the  case,  and 
consesequently  of  the  rights  of  the  assignee.  Broion  v. 
Blyde7iburgh,  3  Seld.  140. 

§  707.  A  question  whether  a  lien  exists  or  not,  may  arise 
in  a  case  where  goods  are  sold  to  be  paid  for  on  delivery,  by 
notes  which  are  then  to  be  delivered  to  the  purchaser.  But 
the  goods  are  delivered  without  the  notes  being  either  given 
or  demanded.  This  is  held  to  be  presumptively  a  waiver 
of  all  right  to  the  notes,  and  of  all  lien  upon  the  goods,  a  com- 
plete title  vesting  in  the  purchaser.  And  although,  as  between 
the  vendor  and  vendee,  it  is  competent  to  show  an  intention 
that  the  delivery  should  not  be  considered  complete  until  per- 
formance of  the  condition,  yet  the  burden  of  proof,  in  such 
case,  is  on  the  vendor,  and  a  lo7iafide  purchaser  from  the  ven- 
dee, after  actual  delivery  of  the  property,  will  hold  it  free  and 
discharged  from  all  lien  or  conditional  sale.  Smith  v.  Lynes, 
1  Sdd.  41. 

§  708.  A  lien  is  a  species  of  property  delicate  and  of 
difficult  preservation.  The  possessor  must  exercise  extreme 
care,  or  it  will  slip  from  his  grasp.  .  If  a  debt  is  already  se- 
cured by  a  lien  upon  property,  and  the  parties  come  to  a 


LIEN   INCONSISTENT   WlTU   CEEDIT.  427 

new  arrangement  with  cacli  other,  agreeing  that  the  debt 
shall  be  paid  in  a  particular  manner,  the  lien  is  gone.  But 
it  will  continue  to  exist  although  there  may  be  a  right  of 
set-off,  upon  the  other  side,  to  an  amount  ecpal  to  the  debt 
secured  by  the  lien ;  because,  in  such  case,  the  parties  are 
viewed  only  as  having  mutual  claims  on  each  other,  and  this 
ought  not  to  affect  any  securities  wliich  either  nuiy  have  on 
his  claim  against  the  other.  Pinnock  v.  Harrison^  3  J/,  dO 
W.  532. 

§  709.  A  lien  is  always  totally  inconsistent  M-itli  a  deal- 
ing on  credit,  and  can  only  subsist  where  payment  is  to  be 
made  in  ready  money,  or  there  is  a  bargain  that  security 
shall  be  given  the  moment  the  work  is  complt'ted ;  and 
hence  where  a  solicitor  took  the  notes  of  an  executor  of  his 
employer,  payable  in  tliree  years,  it  was  held,  tliat  by  neces- 
sary implication,  he  agreed  to  give  up  the  papers,  and  to 
rely  upon  the  security.  Itaiti  v.  Mitchell  4  Campb.  140. 
And  so  no  right  of  lien  can  exist  in  favor  of  the  owner  of 
the  ship,  when  it  appears  by  the  terms  of  the  charter-party 
that  he  had  trusted  to  the  pci'sonal  responsibility  of  the 
merchant,  by  fixing  on  a  specific  time  of  payment  cither 
before  or  after  delivery.  And  in  reference  to  the  credit 
given,  it  is  of  no  consequence  as  to  its  effect  upon  the  lien, 
whether  it  is  secured  by  agreement,  or  arises  out  of  the 
us^ge  of  trade  ;  as  in  a  case  where  goods  were  landed  upon 
a  wharf  in  October,  and  by  well-established  usage,  wharfage 
was  not  payable  until  Christmas.  It  was  held  there  could 
be  no  lien.     CravAhay  v,  Jliuvfray,  4  B.  <£•  Aid.  50. 

§  710.  The  lien,  when  all  its  conditions  are  complete, 
will  continue  in  force  until  the  debtor,  by  complying  with 
the  tenns  of  liis  contract,  pays  or  tenders  the  debt,  and  thus 
releases  the  property  ;  or  until  tlie  holder  of  the  lien  volun- 
tarily and  utterly  resigns  the  possession  of  the  property,  and 
all  right  of  further  detention.  It  sometimes  becomes  neces- 
sary to  deterniijie  how  fur  a  man  may  go  witho\it  losing  his 
lien.    A  mere  marking  and  setting  aside  of  pai'ticular  goods 


428  rossEssiON  the  true  test  of  lien. 

for  a  purcliascr,  will  not  destroy  it,  if  he  still  retains  Lis 
power  over  them.  The  retaining  and  storing  them  in  his 
own  store-house,  will  not  deprive  him  of  the  right,  although 
the  vendee  pay  the  rent  for  their  storage.  Tlic  mere  giving 
a  delivery  order  in  such  case,  will  not  destroy  the  right. 
But  if  the  goods  are  stored  in  the  warehouse  of  a  third  per- 
son, and  an  absolute  delivery  order  is  given  by  the  vendor 
which  is  presented  to,  and  accepted  by,  such  third  person, 
the  lien  will  be  terminated.  But  if  such  delivery  order  be 
conditional,  the  acceptance  of  it  by  the  third  person  would 
not  be  sufficient  until  performance  of  the  condition.  The 
true  test  of  the  existence  of  the  right  of  lien  is  the  continu- 
ance of  the  actual  possession  of  the  vendor,  lie  may  have 
performed  acts  which  <amount  to  a  constructive  delivery,  so 
as  to  pass  the  title,  or  to  avoid  the  statute  of  frauds,  and 
still  his  lien  may  remain.  As  the  lien  imparts  no  right  of 
property,  but  only  that  of  possession  and  detainer,  it  is  en- 
tirely competent  to  perform  such  a  delivery  as  will  be  suffi- 
cient to  pass  the  title,  and  yet  leave  behind  such  an  amount 
of  possession  as  will  continue  the  right  of  lien.  The  perfect 
consistency  of  that  delivery  which  transfers  the  title,  and 
that  possession  which  secures  the  lien,  may  be  seen  in  a  case 
like  this.  There  being  an  entire  contract  of  sale,  a  portion 
of  the  goods  are  delivered  under  it.  The  effect  of  that  is  to 
transfer  the  title  in  the  whole  to  the  vendee.  But  such  part 
delivery  will  not  prevent  the  vendor  from  retaining  his  lien 
upon  what  remains  with  him  for  the  entire  price  of  the 
whole.  The  case,  however,  would  be  different,  if  the  goods 
were  in  the  warehouse  of  a  thu'd  person  and  upon  a  general 
order  given  by  the  vendor,  a  part  delivery  should  be  made, 
with  no  intention  of  distinguishing  between  such  part  and 
the  remainder.    The  lien  would  then  be  gone. 

§  711.  It  is  possible  for  a  lien  to  exist  without  a  personal 
actual  possession.  The  goods  may  be  in  the  hands  of  a  third 
person,  and  by  the  terms  of  the  contract,  the  vendee  is  not 
entitled  to  take  them  until  he  has  complied  with  certain 


QUESTIONS.  429 

provisions,  or  performed  certain  acts  ;  as  -where  A  bought  a 
certain  quantity  of  wool  of  B,  and  removed  it  to  C's  ware- 
house, but  which  was  hired  by  A,  and,  by  the  agreement, 
the  wool  was  not  to  be  removed  by  A  until  the  price  was 
paid  by  him.  B  was  adjudged  to  retam  his  lien.  Doddey 
V.  Varley,  12  Adoljph.  &  Ell.  632.  Tliere  may  be  a  volun- 
tary surrender  of  the  possession  for  a  limited  time,  and  a 
special  purpose,  with  no  intention  of  ultimately  giving  up 
the  possession,  without  losing  the  lien  ;  as  where  tlie  prop- 
erty sold  is  a  horse,  which  is  taken  for  a  limited  time  on 
trial,  the  agreement  being  that  on  delivery  there  shall  be 
payment.    The  lien,  in  such  case,  is  not  lost. 

QUESTIONS. 
"WLat  is  the  general  principle  as  to  the  cessation  of  lien  ?  How  must 
the  surrender  be  to  destroy  the  right?  How  is  it  when  carrier  is  in- 
duced to  make  surrender  by  fraudulent  representations  ?  IIow  in  case  of 
change  of  character  in  which  party  holds  goods?  "What  instance  in 
illustration  ?  "What  should  party  claiming  right  of  lien  distinctly  do 
when  ho  means  to  avail  himself  of  it  ?  Suppose,  when  demanded,  ho 
claims  to  retain  them  on  some  other  ground  ?  "What  would  be  the  efiect 
of  mere  omission  to  assert  it?  What  might  be  elfect  of  asserting  too 
large  a  description  of  lien  ?  "Which  is  the  superior,  the  lien  under  a  judg- 
ment, or  the  equitable  rights  to  the  property  which  may  have  previously 
been  acquired  by  a  purchaser  ?  How,  where  equitable  lien  is  agreed  to 
be  given  to  secure  antecedent  indebtedness,  and  judgment  is  docketed 
prior  to  agreement  ?  "What  will  destroy  the  equitable  lion  of  the  vendor 
of  real  estate  ?  "What  will  always  be  the  effect  of  taking  security  for  a 
debt  payable  at  a  distant  day  ?  Can  assignee  of  bond  and  mortgage,  as 
security  for  loan,  have  his  lien  destroyed  by  mortgagee  discharging  the 
mortgage  ?  "Where  notes  are  to  bo  given  as  security  on  i)urchase,  but 
are  not  so,  what  is  the  effect  of  transfer  of  title  ?  "What,  ]n  such  case, 
are  the  rights  of  Jona  ^<fe  purchaser  from  vendee?  "What  if  debt  bo 
secured  by  lien,  and  parties  come  to  a  new  arrangement  with  each 
other?  IIow  is  it  affected  by  a  right  of  set  off?  How  are  parties  in 
such  case  viewed ?  What  is  a  lien  always  inconsistent  with?  "When 
can  it  only  subsist  ?  "What  illustration  ?  "Wlicn  docs  no  right  of  lion 
exist  in  favor  of  the  owner  of  a  ship  ?  Is  there  any  difference  whether 
the  credit  result  from  contract  or  custom  ?  How  long  will  the  lien, 
when  complete,  continue  ?    "What  will  destroy  it  ?    How  docs  marking 


4:30    WHAT   GIVES   THE   lilGUT  OF  STOPrAGE  IN  TKANSITU. 

and  setting  aside  aflfect  the  lieu  ?  IIow,  retaining  them  in  storehouse  ? 
How  the  giving  of  delivery  order  ?  "What  will  destroy  it,  if  goods  are 
stored  in  storeliouse  of  third  person  ?  "What  results,  if  delivery  order 
be  conditional  ?  What  is  the  true  test  of  the  existence  of  lien  ?  May 
owner  of  it  give  title  by  constructive  delivery  and  yet  retain  right  of 
lien  ?  "What  case  illustrates  this  ?  What  is  mentioned  that  would  give 
a  different  result  ?  "  Is  it  possible  for  a  lien  to  exist  without  a  personal 
actual  possession  ?  How  may  this  be  ?  What  case  in  illustration  ?  How 
may  voluntary  surrender  be  made  and  yet  lien  be  preserved  ? 


CHAPTER  II. 

STOPPAGE   IN   TRANSITU. 
PART  I. 

WHAT  IT  13.      ITS  OEIGra",   AND  WHO  MAT  EXEECISE  IT. 

§  712.  This  is  a  right  peculiar  in  its  character,  and  the 
exercise  of  it  depends  upon  several  conditions,  all  of  which 
must  concur  to  give  it  any  validity.  It  is  a  right  which 
the  law  gives  to  the  vendor,  to  repossess  himself  of  goods 
which  he  has  once  sold  to  the  vendee.  The  right  to  repos- 
sess, implies  that  they  are  not  in  the  actual  possession  of 
the  vendor.  If  they  were,  it  would  not  be  a  right  of  stop- 
page in  transitu,  but  one  of  lien.  The  exercise  of  the  right 
is  subject  to  the  following  conditions  : 

1.  The  price  of  the  goods  sold  must  remain  unpaid. 

2.  Tlie  goods  must  be  in  trcmsit,  in  the  hands  of  a  com- 
mon carrier,  or  of  some  middle  man,  in  their  passage  from 
the  vendor  to  the  vendee. 

3.  The  insolvency  of  the  vendee. 

§  713.  Tliis  right  is  generally  considered  as  deriving  its 
origin  from  equity.  It  is  equity  giving  an  extension  to  the 
right  of  lien.  It  cannot  be  said  to  be  of  legal  derivation, 
because  it  is  in  direct  conflict  with  all  the  legal  principles 


■WHO  MAY  EXERCISE  EIGHT  OV  STOPPAGE.  431 

applicable  to  the  contract  of  sale.  It  is  a  right  growing 
immediately  out  of  the  credit  system  of  transacting  busi- 
ness. That  system  led  to  the  making  of  sales  on  credit,  thus 
subjecting  the  vendor  to  the  possible  loss  of  his  goods  sold, 
on  account  of  the  insolvency  of  the  vendee.  It  seemed  in- 
equitable that  the  vendor,  with  the  full  belief  of  the  vcn^ 
dee's  solvency,  should  be  permitted  to  sell  him  goods,  only 
to  go  into  the  hands  of  his  creditors,  to  pay  their  debts  as 
far  as  they  would  go.  Hence  the  principle  derived  from 
equity,  and  engrafted  into  the  law,  that  if  the  vendor  could, 
by  any  eflPort  he  could  make,  reach  and  rej)osscss  himself 
of  them  before  they  had  actually  gone  into  the  hands  of  the 
vendee  or  his  assignees,  he  might  do  so,  and  hold  them  for 
whatever  ultimate  disposition  might  be  made  of  them. 

§  714.  Tlie  exercise  of  this  right,  as  a  general  rule,  is 
confined  to  a  vendor  or  consignor,  to  whom  the  vendee  is 
liable  for  the  price.  It  may  be,  however,  the  immediate, 
and  not  the  ultimate  vendor.  Tims  where  A,  being  abroad, 
receives  orders  which  arc  sent  to  him,  and  procures  goods 
answering  to  the  order  upon  his  own  credit,  so  that  he  is 
himself  liable  for  them  to  the  vendor.  He  transmits  them 
to  the  orderer,  charging  a  commission.  He  is  held  entitled 
to  stop  them  ^V^  transitu^  because,  so  far  as  the  person  or- 
dering them  is  concerned,  he  is  the  sole  vendor.  Fcisc  v. 
Wray^  3  East.  93.  So,  also,  a  person  sending  goods  to  be 
sold  on  the  joint  account  of  himself  and  his  consignee,  has 
a  right  of  stoppage.  But  the  party  seeking  to  exercise  the 
right  must  stand  in  the  relation  of  vendor,  and  hence  where 
a  person  is  a  mere  surety  for  the  payment  of  the  price  of 
the  goods  sold,  he  is  not  entitled  to  stop  them  in  trajisiiUj 
because  he  is  under  no  primary  liability  to  pay  the  price. 
As  to  what  may  be  considered  subject  to  this  right  of  stop- 
page, it  extends  to  all  kinds  of  goods,  and  even  money  when 
it  is  remitted  on  a  particular  account,  and  for  a  special  pur- 
pose. But  when  the  remittance  is  general,  and  made  in 
part  or  whole  payment  of  a  debt,  it  cannot  be  stopped  in 


432  GOODS  KEQUERED  TO  BE  IN  TEANSIT. 

transitu.  It  has  generally  been  considered  as  confined  to 
cases  of  the  insolvency  of  the  vendee.  But  in  one  case  the 
discovery  of  the  falseness  of  representations  was  held  suffi- 
cient to  give  the  right.  Fitzsimmons  v.  Jodin^  21  Yerm. 
129. 

QUESTION'S. 

Upon  what  depends  the  exercise  of  the  right  of  stoppage  in  transitu  f 
"What  does  the  law  give  to  the  vendor  by  it  ?  What  does  the  right  to 
reposses  simply  ?  What  are  the  conditions  to  which  the  exercise  of  the 
right  is  subject  ?  What  is  this  right  derived  from  ?  What  does  equity 
do  in  giving  it  ?  Why  can  it  not  be  said  to  be  of  legal  derivation  ? 
What  does  the  right  grow  out  of?  What  considerations  give  rise  to  the 
equitable  principle  ?  To  whom,  as  a  general  rule,  is  the  exercise  of  this 
right  confined  ?  May  it  be  the  immediate,  and  not  the  ultimate,  ven- 
dor ?  What  illustration  ?  How  is  it  with  a  person  sending  goods  to  be 
sold  on  joint  account  of  himself  and  his  consignee  ?  What  relation  must 
party  sustain  to  exercise  the  right  ?  How  is  it  with  a  surety  for  the 
payment  of  the  price  of  the  goods  sold  ?  Why  cannot  he  stop  in  tran- 
situ f  In  what  case  may  money  be  stopped  in  transitu  ?  In  what  may 
it  not  be  ? 

PAET  n. 

WHEN,    AND    UNDEE    WHAT    CIEOUMSTANCES,   THE    EIGHT    MAT  BE  EXEE- 
CISED,  AND   WHEN  LOST. 

§  Y15.  One  of  the  necessary  conditions  giving  this  right 
to  the  vendor,  is,  that  the  property  upon  which  it  is  to  be 
exercised,  be  m  transit,  in  the  hands  of  the  common  carrier, 
or  of  some  middle  man,  who  is  possessed  of  it  for  the  pur- 
pose of  transmission  to  the  vendee  or  consignee.  If  still  in 
the  possession  of  the  vendor  or  consignor,  he  may  exercise 
upon  it  his  right  of  lien.  K  it  has  actually  gone  into 
the  possession,  or  under  the  control,  of  the  vendee  or  con- 
signee, it  has  then  become  mingled  with  his  other  property, 
and  has  gone  beyond  the  reach  of  the  party  selling  or 
consigning. 

§  T16.  One  of  the  most  difficult  points  of  inquiry  is, 
what  kind  of  delivery  to  the  vendee  or  consignee  is  sufficient 


DELIVEKY   AS   AFFECTING  THE  EIGHT  OP   STOPPAGE.      433 

to  destroy  this  riglit  ?  Or  what  ends  the  transit  ?  Among 
the  instances  of  delivery  which  have  been  adjudged  sufficient 
to  take  away  this  right,  are  the  fullowiug.  ''  A  delivery  of 
the  key  of  the  vendor's  warehouse  to  the  purchaser  ;  paying 
the  vendor  rent  for  the  goods  left  in  his  warehouse ;  lodging 
an  order  from  the  vendor  for  delivery  with  the  keeper  of 
the  warehouse ;  delivering  to  the  vendee  a  hill  of  parcels, 
with  an  order  on  the  storekeeper  for  the  delivery  of  the 
goods  ;  demanding  and  marking  the  goods  by  the  agent  of 
the  vendee,  at  the  inn  where  they  had  arrived  at  the  end  of 
the  jouraey  ;  suffering  the  goods  to  be  marked  and  re-sold, 
and  marked  again  by  the  under-purchaser."  2  Kenfs  Coram. 
546.  There  is  no  doubt  but  that  when  the  goods  come  to 
the  actual  possession  of  the  vendee  that  is  sufficient ;  and 
Lord  Kenyon  once  said  that  the  goods  must  come  to  the 
coi-poral  touch  of  the  consignee ;  but  he  afterwards  re- 
gretted the  use  of  that  exjjression,  and  it  is  now  well  settled 
that  a  constructive  possession  may  be  sufficient.  Tliis  de- 
parture from  the  actual  into  the  constructive,  has  led  to  the 
creation  of  much  doubt  and  difficulty  in  determining  many 
cases  that  have  arisen. 

§  717.  What  constitutes  co7istructive  delivery,  in  any 
given  case,  is  not  so  easily  arrived  at.  It  partakes  more  of 
the  nature  of  aJictio7i  than  a  fact,  and  is  attempted  to  be  so 
moulded  as  to  serve  the  purposes  of  equity.  It  is  generally 
imderstood  as  occurring  where  the  property  is  placed  within 
the  control  of  the  vendee.  Tlie  goods  must  have  ceased  to 
be  in  transit,  and  must  have  come  into  the  hands  of  tlie 
vendee,  or  some  person  acting  for  him.  They  may  amvc 
at  the  end  of  their  transit,  and  go  into  the  possession  of  a 
wharfinger,  and  yet  the  vendee  may  decline  receiving  them, 
and  the  vendor  still  be  at  liberty  to  exercise  this  right.  As 
where  A  ordered  goods  of  B  in  London,  which  were  sent 
and  delivered  to  C,  a  wharfinger,  on  A's  account,  and  freight 
and  charges  were  all  paid.  But  A,  becoming  insolvent,  de- 
clined receiving  the  goods.  It  was  hcl<i  that  the  right  was 
28 


434:  WHEN  GOODS  AEE  IN  TKAN8IT. 

not  gone  from  B.  Mills  v.  Ball,  2  Bos.  cfc  Pull.  457.  It 
is  generally  understood  that  the  vendee,  finding  himself  in- 
solvent, and  unwilling  that  the  goods  just  purchased  should 
go  to  other  creditors,  may,  before  delivery,  rescind  the  con- 
tract of  sale  with  the  assent  of  the  vendor,  so  that  the  goods 
can  be  retaken  by  the  latter.  But  this  is  a  right  that  an 
insolvent  vendee  can  only  exercise  while  the  goods  are  m 
transit,  and  previous  to  committing  any  act  of  bankruptcy, 
and  it  will  be  too  late  after  actual  delivery,  and  mingling 
the  goods  with  his  other  property. 

§  Y18.  It  is  a  clear  deduction  from  all  the  cases,  that  the 
goods  are  always  to  be  deemed  in  transit  while  they  are  in  the 
possession  of  the  carrier  as  carrier,  even  although  he  may 
have  been  appointed  by  the  vendee ;  and  they  are  also  so 
considered  while  they  are  in  any  place  of  deposit  connected 
with  their  transmission  and  delivery,  and  until  their  arrival 
at  the  actual  or  constructive  possession  of  the  vendee.  Thus 
it  is  held  that "  goods  may  be  stopped  so  long  as  the  transit 
continues,  whether  by  land  or  water,  from  the  consignor  to 
the  consignee,  and  whether  they  are  in  the  hands  of  the 
carrier,  a  warehousekeeper,  wharfinger,  or  any  other  middle 
man  connected  with  the  transportation.  The  transit  ends 
when  the  goods  have  reached  the  place  of  delivery,  and  the 
consignee  has  exercised  some  act  of  ownership  over  them." 
Motham  v.  Heyer,  1  Denio,  487.  In  the  same  case  it  was 
held,  that  where  the  consignee  received  the  bill  of  lading, 
paid  the  freight,  and  entered  the  goods  at  the  custom-house, 
the  duties,  however,  remaining  unpaid,  and  the  consignee 
became  insolvent,  the  transitus  was  ended,  and  the  right  of 
stoppage  gone.  In  Northey  v.  Field,  2  Esp.  613,  the  goods 
were  lodged  in  a  public  warehouse,  the  duties  being  unpaid, 
but  the  freight  seems  not  to  have  been  paid,  nor  the  goods 
entered  in  the  name  of  the  consignee.  Held  that  the  con- 
signor still  retained  his  right.  So,  also,  in  a  case  where  the 
vendee  had  even  paid  the  freight.  Donath  v.  Broornliead, 
7  Barr,  301.     So  the  right  is  held  to  remain  while  a  vessel 


WHEN  TEANSIT  IS  TEEiUNATED.  435 

is  performing  quarantine  at  the  port  of  delivery.  Hoist  v. 
Pownal,  1  Esp.  240. 

§  719.  It  seems  admitted  that  the  transitus  is  completely 
at  an  end  when  the  goods  arrive  at  an  agent's  who  is  to  keep 
them  until  he  receives  the  fm-ther  orders  of  the  vendee. 
But  by  a  recent  case  the  right  is  not  terminated  by  the 
goods  coming  to  the  hands  of  a  shipping  agent  appointed 
by  the  vendee,  where  they  are  to  await  further  orders  as  re- 
gards the  time  and  mode  of  shipment  to  the  vendee.  The 
rule  there  established  is,  that  the  transit  continues  imtil  the 
goods  come  into  the  possession  of  the  vendee,  or  of  some 
agent  authorized  to  act  in  respect  to  the  disposition  of  them 
otherwise  than  hj  forwardinfj  them  to  the  vendee.  Harris 
V.  Pratt.,  IT  New  York  Bep.  249.  This  case  is  in  affirm- 
ance of  the  general  principle  laid  down  by  Chancellor 
Kent — "  that  if  the  delivery  to  a  carrier  or  agent  of  the  ven- 
dee be/br  the  purpose  of  conveyance  to  the  vendee.,  the  right 
of  stoppage  continues,  notwithstanding  such  a  constructive 
delivery  to  the  vendee  ;  but  if  the  goods  be  delivered  to  the 
carrier  or  agent  for  safe  custody,  or  for  disposal  on  the  part 
of  the  vendee,  and  the  middle  man  is  by  the  agreement  con- 
verted into  a  special  agent  for  the  buyer,  the  transit  or  pas- 
sage of  the  goods  terminates,  and  with  it  the  right  of  stop- 
page. So,  a  complete  delivery  of  part  of  an  entire  parcel 
or  cargo,  with  intention  to  take  the  whole,  terminates  the 
transitus,  and  the  vendor  cannot  stop  the  remainder."  2 
Kenfs  Comm.  545. 

§  720.  Goods  are  generally  considered  in  the  constructive 
possession  of  the  vendee,  when  they  have  reached  the  place, 
to  which,  by  the  terms  of  the  contract,  they  were  originally 
to  be  carried.  Tlius  where  goods  were  purchased  at  London 
by  a  vendee  residing  at  Manchester,  to  be  forwarded  to  his 
agents  at  Hull,  for  the  purpose  of  being  shipped  by  them 
to  Hamburgh,  their  arrival  at  Hull  and  delivery  to  the 
vendee's  agent  there,  was  held  to  terminate  the  transit. 
Dixon  V.  Baldwin  J  5  East.  175.    Where  goods  are  placed 


436        ETIDENCE  OF  INSOLVENCY  OF  VENDEE. 

on  board  a  vessel  to  be  therein  transmitted  directly  to  the 
vendee,  the  delivery  is  not  completed  by  the  .placing  on 
board,  because  a  subsequent  and  actual  j)ossession  is  pro- 
vided by  the  bill  of  lading.  Eut  if  such  goods  are  to  be 
transported  directly  to  a  foreign  market,  away  from  the 
vendee,  the  delivery  is  then  considered  as  complete,  so  as  to 
destroy  the  right  of  stoppage,  no  other  or  better  delivery 
than  that  on  board  the  ship  being  contemplated.  The  rela- 
tions sustained  at  the  time  by  the  carrier  are  important  in 
determining  the  question  of  termination  of  transit.  So  long 
as  he  continues  in  performance  of  the  contract  he  makes 
with  the  vendor  for  their  carriage,  there  remains  the  right 
of  stoppage  in  transitu.  But  if  this  contract  is  performed, 
and  he  enters  into  a  subsequent  one,  agreeing  to  hold  the 
goods  as  the  special  agent  or  bailee  for  the  vendee,  for  the 
purpose  of  custody  on  his  account,  the  right  of  stoppage 
will  be  lost. 

§  Y21.  Another  necessary  condition  attached  to  the  exer- 
cise of  this  right,  is  the  insolvency  of  the  vendee.  The  term 
is  here  used  to  mean  an  inability  to  pay  his  debts.  But  the 
question  may  arise  as  to  what  shall  be  deemed  sufficient 
evidence  of  that  condition  to  justify  the  assertion  of  this 
right  by  the  vendor.  It  has  been  generally  understood  that 
any  well-founded  or  probable  information  of  such  pecuniary 
embarrassment,  on  the  part  of  the  vendee,  as  to  prevent  him 
from  honoring  his  drafts,  or  meeting  the  demands  of  his 
creditors,  is  a  sufficient  insolvency  to  justify  the  vendor  in 
exercising  the  right.  The  vendor,  however,  must  always 
assume  the  responsibility  of  his  own  act,  and  if  he  stop  the 
goods  wrongfully,  the  vendee  may  not  only  retain  them,  but 
must  also  be  indemnified  for  all  the  damages  and  expenses 
growing  out  of  the  stoppage. 

§  722.  Another  inquiry  which  it  becomes  important  to 
make,  refers  to  the  acts  of  the  vendee  which  have  a  bearing 
upon  the  exercise  of  this  right.  It  has  been  made  a  matter 
of  some  question  whether  the  vendor  could  not  avail  him- 


WHAT   WILL   AMOrXT   TO   A   DELIVERY.  437 

self  of  his  right  at  any  time  before  the  goods  had  reached 
their  place  of  destination  ;  or  whether  the  vendee  possessed 
the  right  to  intercept  them  on  their  way,  and  by  taking 
possession  in  any  part  of  their  transit,  deprive  the  vendor 
from  subsequently  exercising  the  right.  Since  the  case  of 
Mills  V.  Ball,  2  Bos.  &  Pull.  4G1,  and  Oppenhehn  v.  Rus- 
sell., 3  Bos.  d)  Pull.  42,  it  has  been  generally  conceded  that 
the  vendee  may  intercept  the  goods  in  any  part  of  their 
transit,  and  by  taking  possession  of  them  as  owner,  the  de- 
livery becomes  complete,  and  the  right  of  stoppage  gone. 
But  if  a  vendee  merely  takes  samples  of  the  goods,  while 
they  yet  remain  in  the  hands  of  the  carrier,  and  no  obstacle 
prevents  their  full  delivery,  it  will  not  be  sufficient  to  end 
the  transit.  But  if  obstacles  prevent  a  full  delivery,  and 
samples  are  taken  as  the  best  mode  of  taking  possession,  the 
right  of  stoppage  will  be  gone ;  as  where  the  vendee  of 
several  hogsheads  of  sugar  upon  receiving  notice  of  their 
arrival,  took  samples  from  them,  and  desired  the  carrier  to 
let  them  remain  in  his  warehouse  until  he  should  receive 
further  directions,  and  soon  after  became  bankrupt,  it  was 
held  that  the  transit  was  at  an  end.  Foster  v.  Trampton,  6 
Barn.  &  Cress.  107. 

§  723.  ■  A  delivery  order,  absolute  in  its  terms,  given  to 
the  vendee,  when  the  goods  are  in  the  warehouse  of  a  third 
person,  will  not  destroy  the  right  while  it  remains  unac- 
cepted by  the  warehouseman ;  but  on  its  acceptance,  and 
the  latter  becoming  the  bailee  or  agent  of  the  vendee,  the 
right  is  gone.  So  a  complete  delivery  l)y  the  latter,  of  part 
of  the  goods  sold  under  an  entire  contract,  in  compliance 
with  a  general  order  by  the  vendor,  will  divest  the  vendor 
of  the  right  of  stoppage.  Hammond  v.  Anderson,  1  Bos. 
&  Pull.  N.  R.  G9. 

§  724.  It  may  become  very  important  to  know  what 
power  a  vendee  or  consignee  possesses,  by  means  of  a  biU 
of  lading,  to  terminate  the  vendor's  right  of  stoppage,  while 
the  goods  are  yet  at  sea  ;  and  there  seems  now  no  doubt  but 


4:38  DELIVERY   BY  BILL  OF  LADING. 

that  a  consignee  by  his  indorsement  of  the  bill  of  lading  to 
a  honafich  purchaser,  for  a  valuable  consideration,  without 
notice  of  any  adverse  interest,  will  pass  the  entire  property 
divested  of  all  right  of  stoppage.  Conard  v.  The  Atlantic 
Insurance  Company,  1  Peters,  386.  In  accordance  with 
well-settled  principles  of  equity,  a  mere  deposit  of  the  bill 
of  lading,  without  indorsement,  will  create  a  lien  on  the 
cargo  to  the  extent  of  the  money  advanced,  which  will  be 
superior  to  the  consignor's  right  of  stoppage.  But  the  right 
of  the  vendor  is  superior  to  any  lien  that  may  be  acquu*ed 
by  any  creditor  of  the  vendee,  because  it  is  the  elder  lien, 
and  cannot  be  superseded  by  any  one  of  this  character  ;  and 
hence  when  the  goods  were  levied  upon  by  execution  at  the 
suit  of  a  creditor  of  the  purchaser,  before  the  transitus  was 
ended,  it  was  held  inoperative  as  against  the  right  of  the 
vendor.     Oppenheim  v.  Bussell,  3  Bos.  (&  Pull.  42. 

QUESTIONS. 

What  is  one  of  the  necessary  conditions  giving  this  right  to  the  ven- 
dor ?  "What  effect  if  still  in  possession  of  the  vendor,  or  if  gone  into 
possession  of  vendee  ?  What  instances  of  delivery  have  been  adjudged 
suflBcient  to  take  away  this  right  ?  What  result  when  goods  come  into 
actual  possession  of  the  vendee  ?  What  else  besides  actual  possession  is 
sufficient  ?  What  is  the  nature  of  constructive  delivery  ?  When  does 
it  occur  ?  Suppose  goods  have  arrived  at  the  end  of  their  transit,  and 
have  gone  into  the  hands  of  a  wharilnger,  and  vendee  declines  receiving 
them,  what  is  vendor's  right  ?  What  illustration  ?  When  can  an  insol- 
vent vendee  exercise  the  right  of  rescinding  contract  and  retm-ning  the 
goods  ?  When  are  goods  always  to  be  deemed  in  transit  ?  Under  what 
other  circumstances  are  they  so  considered  ?  How  long  may  goods  al- 
ways be  stopped  ?  When  does  the  transit  end  ?  What  illustrations  ? 
When  is  the  transitus  completely  at  an  end  ?  What  is  the  rule  estab- 
lished in  Harris  v.  Pratt  ?  What  the  rule  laid  down  by  Chancellor  Kent? 
When  are  goods  considered  in  the  constructive  possession  of  the  vendee? 
What  illustration  ?  How,  when  goods  are  placed  on  board  a  vessel  to 
be  transmitted  directly  to  vendee  ?  How,  if  they  are  to  be  transported 
directly  to  a  foreign  market  away  from  vendee  ?  How  is  it  with  the 
right  so  long  as  carrier  continues  in  performance  of  his  contract  with 
the  vendor  ?    How,  when  this  contract  is  performed,  and  he  enters  into 


HOW   EIGHT  OF  STOPPAGE  EXERCISED.  43D 

subsequent  one  with  vendee  ?  What  other  condition  is  necessary  to  the 
exercise  of  the  right  ?  "What  does  term  insolvency  here  mean  ?  What 
is  deemed  sufficient  evidence  to  justify  vendor  in  exercising  the  riglit  ? 
Who  must  assume  the  responsibihty  of  its  exercise  ?  What,  if  lie  take 
the  goods  wrongfully  ?  What  acts  of  the  vendee  may  destroy  this 
right  ?  Has  he  a  right  by  intercepting  them  in  transitu  to  destroy  the 
right  ?  How,  if  he  take  samples  while  they  are  yet  with  the  carrier  ? 
Under  what  circumstances,  in  such  case,  will  there  be,  or  not  be,  a  de- 
livery ?  What  illustration  ?  •  When  is  delivery  order  a  good  delivery  ? 
When  not  ?  When  will  part  delivery  destroy  the  right  ?  IIow  can  right 
be  destroyed  while  goods  are  at  sea  ?  When  will  deposit  of  bill  of 
lading  interfere  with  the  right  ?  And  to  what  extent  ?  IIow  is  it  with 
liens  acquired  by  creditors  of  vendee  ?  Are  such  liens  superior  or  infe- 
rior to  the  right  ?    What  illustration? 


PART  in 

HOW  EXEECISED,  AND   ITS  EFFECT. 

§  Y25.  The  rendor  or  consignor,  in  order  effectuaUy  to 
exercise  tliis  riglit,  is  under  no  necessity  of  making  actual 
seizui'c  of  tlie  goods  while  on  their  transit.  All  that  is  nec- 
essary is  for  him  to  give  notice  to  the  carrier,  or  middle 
man  who  has  them  in  possession,  and  to  claim  them  of  him, 
while  on  their  passage,  or  prior  to  delivery  to  the  vendee. 
Thus  where  a  quantity  of  wine  was  in  the  king's  warehouse 
for  sale,  the  duties  remaining  impaid,  the  consignee  became 
insolvent,  and  the  consignor  made  claim  to  the  property. 
Ileld  this  was  a  sufficient  exercise  of  the  right  of  stoppage 
in  transitu.  Nortliexj  v.  Fields  2  Esp.  613.  So  a  notice  to 
the  carrier  to  retain  the  goods  for  vendor,  and  not  deliver 
them  to  the  vendee,  is  sufficient,  and  if  the  carrier,  notwith- 
standing the  notice,  subsequently  delivers  them,  he  will  be 
liable.    Tlie  carrier,  however,  will  be  entitled  to  his  freight. 

§  726.  Tlic  vendor  must  make  his  claim  of,  and  give  his 
notice  to,  the  person  having  the  immediate  custody  of  the 
goods.  If  given  to  a  principal,  whose  agent  has  them  in 
custody,  it  must  be  given  at  such  a  time,  and  under  such 
circumstances,  that  such  i)rincipal,  by  the  exercise  of  rca- 


•140         SALE  NOT  KESCINDED  BY   STOPPAGE  IN  TKANSITU. 

sonablo  diligence,  may  communicate  it  to  liis  agent  in  time 
to  prevent  the  delivery  to  the  consignee. 

§  Y27.  Tlierc  has  been  some  conflict  of  decision  regarding 
the  effect  of  the  exercise  of  this  right.  The  difficult  point 
to  determine  has  been  whether  the  exercise  of  the  right  re- 
scinded the  sale,  Lord  Ahinger,  in  Wentworth  v.  Outhwaite, 
10  M.  i&  W.  451,  expressing  the  opinion  that  it  had  that 
eficctj  while  the  other  Barons,  I^arJce,  Alderson^  and  RoJfe^ 
were  of  a  contrary  opinion.  It  is  now  very  generally  con- 
ceded, Rowley  v.  Bigelow.  12  IHclc.  313,  Stanton  v.  Eager^ 
16  Pick.  474,  and  other  cases  establishing  the  position,  that 
the  resumption  of  the  goods  by  the  vendor  had  not  the  effect 
of  rescinding  the  contract  of  sale,  but  only  of  restoring  the 
vendor  to  the  situation  he  occupied  when  he  parted  with 
the  possession.  It  reinstates  him  in  his  right  of  lien.  The 
vendee,  or  his  assignees,  will  be  entitled  to  the  goods  on 
payment  or  tender  of  the  price,  and  so  also  will  the  vendor, 
although  he  has  actually  repossessed  himself  of  the  goods, 
be  entitled  to  sue  for  the  price,  provided  he  have  the  goods 
ready  to  redeliver  upon  payment.  Thus  the  right  is  found 
to  resolve  itself  into  a  mere  equitable  lien,  leaving  the  par- 
ties their  rights  and  remedies  under  the  contract  still  entire. 

QUESTIONS. 

Is  actual  seizure  necessary  to  enforce  this  right  ?  •  What  is  all  that  is 
necessary  for  the  vendor  to  do  ?  "What  illustration  ?  Of  whom  must 
vendor  make  claim,  and  to  whom  give  notice  ?  "What  notice  necessary 
when  given  to  principal  ?  What  effect  has  the  exercise  of  this  right  on 
the  contract  as  to  rescinding  it  ?  What  are  the  vendee's  and  vendor's 
rights  notwithstanding  the  exercise  of  the  right  ?  What  then  does  it 
resolve  itself  into  ? 


LEGiX  LIABILITT  OF  IXFJlJO'S.  441 

CIIArTEU  III. 

DOMESTIC    RELATIONS. 

PART  I. 
INFANCY. 

§  728.  An  infant  is  a  person  under  t"wenty-one  years  of 
age.     The  important  legal  inquiries  are, 

1.  What  acts  an  infant  can  do  tliat  are  legally  Linding 
upon  liimself  and  liis  estate. 

2.  Wliat  acts  are  void  or  voidable,  and  Low  avoided  or 
confirmed. 

§  Y29.  An  infant  is  bound  by  all  contracts  he  may  make 
for  necessaries,  and  these  include  clothing,  victuals,  medical 
aid,  and  "  good  teaching  or  instruction,  -svlicreby  he  may 
profit  himself  afterwards."'  lie  is  bound  for  these  only  so 
far  as  they  are  to  him  articles  of  necessity  ;  and  then  only 
for  their  real  value ;  so  that  it  is  the  iin})lii;d,  and  not  the 
real  contract,  upon  which  the  liability  rests ;  and  he  will 
not  be  liable  on  a  note  given  for  necessaries,  or  for  money 
borrowed  to  purchase  them,  although  it  may  be  actually 
applied  to  that  purpose.  The  creditor,  before  trusting,  is 
bound  to  inquire  into  his  condition,  and  will  not  be  entitled 
to  recover  if  they  are  properly  supplied  l)y  the  infant's 
friends,  or  if  he  lives  with  his  father  or  guardian,  who  exer- 
cises over  him  due  care  and  protection.  Necessaries  for  the 
infant's  wife  and  children  arc  considered  necessaries  for 
him. 

§  730.  Infants  are  liable  for  damages  suffered  by  others 
in  consequence  of  their  own  tortious,  wrongful,  or  fraudu- 
lent acts.  Tliey  arc  liable  for  trespass,  assault,  constructive 
torts,  trover,  or  wrongful  conversion  of  property,  and  for 
fraudulently  obtaining  goods.    Infancy  affords  no  shelter 


4:4:2  infant's  acts  void  and  VOroAELE. 

where  jiroperty  lias  been  obtained  possession  of  under  pre-  *" 
tence  of  legal  purchase,  and  the  claim  that  he  w^  of  age 
at  the  time ;  for  although  he  may,  by  setting  up  his  legal 
disability,  avoid  payment  of  the  price,  yet  the  owner  may 
reclaim  his  goods,  upon  the  ground  that  he  has  not  parted 
with  his  title  to  them.     Mtts  v.  JIall,  9  JV.  Hamp.  Ml. 

§  731.  An  infant  may  do  many  valid  acts,  such  as,  to 
convey  real  estate  as  a  trustee,  discharge  a  mortgage  on 
payment,  act  as  an  executor,  and,  if  a  male,  at  fourteen, 
and,  if  a  female,  at  twelve,  may  enter  into  a  valid  contract 
of  marriage.  But  his  contract  should  be  executed,  as  he 
would  not  be  liable  upon  an  executory  contract  to  marry, 
although  an  infant  may  hold  an  adult  on  such  a  promise. 
Sunt  v.  Peake,  5  Cow.  4T5.  As  a  general  rule,  whatever 
the  law  binds  an  infant  to  do,  will  bind  him  if  he  does  it 
voluntarily  without  any  compulsory  process.  The  People 
V.  Moores,  4  I)e7i.  518. 

§  732  Most  of  the  acts  of  an  infant  relating  to  the  trans- 
action of  business,  are  voidable  only ;  and  his  attainment 
of  majority  vests  him  with  the  right  of  electing  whethei*  he 
will  confirm  or  repudiate.  The  tendency  has  been  to  in- 
crease the  list  of  voidable  contracts ;  but  the  general  rule  is 
laid  dovrn  to  be,  that  the  court  pronounces  those  conti'acts 
void  which  are  manifestly  to  the  infant's  prejudice  ;  those 
good,  as  for  necessaries,  which  are  to  his  benefit ;  and  those 
voidable  at  his  election,  which  are  uncertain  as  to  his  preju- 
dice or  benefit. 

§  733.  An  infant  may  avoid  his  deeds,  writings,  and 
parol  contracts,  by  his  express  dissent ;  or  by  plea  or  action. 
He  may  avoid,  during  infancy,  a  sale  of  chattels,  and,  by 
his  guardian,  bring  an  action  to  recover  them  back.  But  it 
seems  that  a  sale  of  land  cannot  be  avoided  by  him  until  he 
comes  of  age.  Poof  v.  Staford,  9  Cow.  626.  Pool  v.  Mix, 
17  Wend.  119.  K  the  act  be  of  such  a  character  as  to  re- 
quire confirmation  after  he  comes  of  age  in  order  to  render 
it  binding,  his  assent  to  it  may  be  gathered  from  slight  acts 


OTFANT  TO  AFFIRM  OE  DISAFFIRM  CONTRACT.  -143 

and  circumstances.  "WTiere  a  contract  is  voidable  by  an  in- 
fant on  bis  coming  of  age,  be  must  give  notice  of  disaffirm- 
ance in  a  reasonable  time.  Ilolmes  v.  JBlogg,  8  Taunt.  35. 
Tbis  implies  tbat  if  no  dissent  was  given,  all  voidable  con- 
tracts -^ould  become  binding.  But  otber  autborities  are  to 
tbe  effect  tbat  some  acts  of  affirmance  are  necessary,  after 
arriving  at  age,  before  a  contract  made  in  infancy  can  be- 
come binding.  In  tbe  case  of  a  contract  considered  void, 
tbe  court  required  tbe  infant,  after  arriving  at  age,  to  do 
some  act  of  assent  and  ratification,  or  knowingly  to  receive 
some  benefit  from  it.  Curtin  v.  Pation,  11  Serg.  cD  Rawle^ 
305.  In  all  cases,  mucb  tbe  safer  course  is  for  tbe  infant, 
soon  after  be  comes  of  age,  to  do  some  positive  act  in  affirm- 
ance or  disaffirmance  of  tbe  contract.  A  sufficient  lapse  of 
time,  bowever,  in  voidable  contracts,  will  often  imply  assent ; 
and  hence,  wbere  a  sale  was  made  of  infant's  estate,  and 
eighteen  years  were  suffered  to  elapse  after  he  came  of  age, 
without  impeaching  tbe  conveyance,  held,  tbat  although  tbe 
sale  was  originally  voidable,  yet  be  had  impliedly  afiirmed 
it.    Bostwich  V.  Aikins,  3  Comst.  53. 

QUESTIONS. 

"Who  is  an  infant  ?  What  legal  inquiries  arise  in  relation  to  him? 
"What  is  an  infant  bound  for  ?  "What  do  necessaries  include  ?  How  far 
is  he  bound  for  these  ?  "What  is  the  creditor,  before  trusting,  bound  to 
inquire  ?  "When  is  he  not  entitled  to  recover  ?  "What  is  an  infant's  lia- 
bility for  damages  ?  "What  acts  are  they  liable  for  ?  To  what  does  in- 
fancy afford  no  protection  ?  "What  valid  acts  may  an  infant  do  ?  "When 
is  a  contract  of  marriage  valid  ?  "What  is  a  general  principle  as  to  the 
validity  of  infant's  contracts  ?  What  is  the  general  character  of  most  of 
an  infant's  business  transactions  ?  What  has  the  tendency  been  ?  What 
Is  the  general  rule  as  to  their  contracts  being  vo'id,  voidable,  and  good  ? 
How  may  an  infant  avoid  his  deeds,  ■writings,  and  parol  contracts? 
"When  may  he  avoid  a  sale  of  chattels  ?  "When  of  land  ?  What  may 
Iiis  assent,  when  required,  be  gathered  from  ?  "Wlien  a  contract  is  void- 
able, what  must  infant  do  ?  What  is  the  safer  course  for  infant  to  pursue 
on  coming  of  age  ?  May  a  sufficient  laps©  of  time  imply  assent  ?  What 
instance  in  illustration  ? 


444       AGE  OF  CONSENT  AND  DEGEEE3   OF  RELATIONSHIP. 

PART  IL 

MAEEIAGE. 

§  734.  This  relation  may  be  entered  into  by  all  persons 
having  the  use  of  their  understanding,  and  possessing  suffi- 
cient discretion  for  the  common  affairs  of  life.  All  idiots, 
and  imbeciles,  and  lunatics  (except  in  their  lucid  intervals), 
are  incompetent,  as  they  are  incapable  of  giving  their  assent. 
All  maiTiages  procured  by  force  or  fraud  are  also  void,  as 
the  element  of  assent  is  wanting,  so  one  made  during  such  a 
state  of  intoxication  as  would  take  away  the  ability  to  con- 
tract. An  .erroneous,  or  even  false,  representation  or  sup- 
pression, would  not  be  sufficient  to  avoid  it,  unless  it  went 
to  the,  very  substance  of  the  contract.  Any  such  represen- 
tation in  relation  to  qualities,  condition,  rank,  fortune, 
character,  would  be  insufficient,  all  those  being  matters  open 
to  general  inquiry.  The  age  of  consent,  borrowed  by  the 
English  from  the  Eoman  law,  is  fourteen  in  the  male,  and 
twelve  in  the  female.  Marriage  within  that  age  is  voidable 
by  the  party  when  he  arrives  at  the  age.  And  then  it  is 
only  voidable  at  the  infant's  election.  Tlie  other  party,  if 
of  full  age,  has  no  power  of  avoidance.  A  fatal  bar  to  the 
entering  into  this  relation,  is  the  having  a  former  husband 
or  wife  living.  A  second  marriage,  under  such  circum- 
stances, is  void  at  common  law. 

§  Y35.  Questions  of  much  difficulty  arise  as  to  the  degrees 
of  relationship,  either  by  blood  or  affinity,  within  which 
marriages  are  prohibited.  Tlie  canon  and  common  law  rank 
consanguinity  and  affinity  together,  although  nature  makes 
a  wide  difference  between  them,  the  former  being  blood 
relationship,  and  the  latter  merely  the  relation  conti-acted 
by  marriage  between  a  husband  and  his  wife's  kindi*ed,  and 
a  wife  and  her  husband's  kindred.  Intermarriages  between 
relations,  either  by  blood  or  affinity  in  the  lineal  line, 
whether  ascending  or  descending,  are  unlawful,  as  not  only 


ESSENTIALS  TO  TALrDITT  OF  MAKEIAOE.  445 

being  unnatural,  but  as  leading  to  a  confusion  of  rights  and 
duties.  In  regard  to  collaterals,  there  is  difficulty  in  fixing 
upon  forbidden  degrees.  Some  States  adopt,  by  statute, 
degrees  nearly  resembling  the  Levitical,  withm  which  to 
declare  marriages  void.  Marriages  between  brothers  and 
sisters,  although  collateral,  are  forbidden  by  law  equally  as 
those  in  the  lineal  line.  But  beyond  that,  if  any  prohibition 
exist,  it  must  be  found  in  the  statute,  as  it  is  not  in  the 
canon,  or  common  law. 

§  736.  The  law  views  marriage  as  altogether  in  the  nature 
of  a  civil  contract,  entered  into  between  parties  capable  of 
contracting,  and  of  entering  into  those  relations.  Tlie  con- 
sent of  the  parties  themselves  is  all  that  is  necessary  to  the 
validity  of  the  man-iage  contract,  that  of  parents  or  guar- 
dian not  being  required.  Nor  are  any  peculiar  rites  or 
ceremonies  necessary  to  be  performed,  or  the  agency  of  any 
particular  class  of  men  required,  to  render  a  marriage  bind- 
ing. Nothing  ecclesiastical  is  necessary  to  give  it  validity. 
No  offices  of  a  clergyman  are  required,  nor  even  of  a  magis- 
trate. There  is  no  necessity  of  acknowledgment  before 
witnesses,  as  the  marriage  may  be  inferred  from  continual 
cohabitation,  and  reputation  as  husband  and  wife  established 
with  their  knowledge  and  assent.  In  some  of  the  States, 
certain  things,  such  as  the  publication  of  bans,  arc  required 
by  statute,  but  in  others  the  common  law  is  left  to  contrul. 
§  T37.  A  point  of  some  difficulty  has  been  presented  re- 
garding the  validity  of  a  marriage  by  the  laws  of  the  State 
where  the  pjfi-ties  reside,  the  same  having  been  solemnized 
in  another  State,  where  the  legal  requisitions  are  of  a  difler- 
ent  character.  Parties  reside  in  Massachusetts.  Tliey  de- 
sire to  evade  the  statute  requisitions  of  tliat  State  relating 
to  marriage,  and  succeed  in  doing  so,  by  going  to  New  York, 
and  getting  married  in  confonnity  with  the  laws  of  the  latter 
State.  Tliey  then  retni-n  to  Massachusetts,  and  claim  that 
a  marriasre  between  its  own  citizens,  solemnized  in  fraud  of 
its  laws  shall  be  nevertheless  deemed  valid,  and  the  rights 


446  VALIDITY    OF   MAHKIAGE   EVERYWHERE. 

secured  under  it  protected  by  those  laws.  After  a  good 
deal  of  discussion,  both  in  England  and  in  this  country,  it 
is  finally  settled  that  such  a  right  does  exist ;  and  that  a 
marriage  valid  by  the  laws  of  the  place  where  it  is  made,  is 
to  be  considered  as  valid  everywhere,  even  by  the  laws  of 
the  State  of  which  it  was  itself  an  evasion.  This  is  contrary 
to  the  general  principles  of  law  applicable  to  other  contracts, 
and  rests  upon  grounds  of  policy  peculiar  to  itself ;  these 
grounds  being  principally  the  prevention  of  the  disastrous 
consequences  which  would  ensue  from  holding  such  mar- 
riages to  be  void.  Medway  v.  Needham^  16  Mms.  157. 
Comptoii  V.  Bearcroft,  2  Sagg.  Consist.  Hep.  443. 

QUESTIONS. 
"Who  may  enter  into  the  relation  of  marriage  ?  Who  are  incompetent, 
and  why  ?  How  as  to  marriages  procured  by  force  or  fraud  ?  How 
during  a  state  of  intoxication  ?  What  effect  have  misrepresentations  as 
to  qualities,  condition,  rank,  fortune,  or  character  ?  What  is  the  age  of 
consent  ?  How  with  marriage  within  that  age  ?  At  whose  election  is 
it  voidable  ?  How  is  it  with  party  of  full  age  ?  What  is  a  fatal  bar  to 
this  relation  ?  What  is  the  difference  between  consanguinity  and  affin- 
ity ?  How  does  the  canon  and  common  law  rank  them  ?  How  are  in- 
termarriages between  relations  by  blood  or  affinity  in  the  lineal  line  ? 
How  in  the  collateral  line  as  to  brothers  and  sisters  ?  How  as  to  prohi- 
bition beyond  that  degree  ?  How  does  the  law  view  marriage  ?  What 
is  all  that  is  necessary  ?  Is  consent  of  parents  or  guardians  necessary  ? 
Are  any  peculiar  rites  and  ceremonies  necessary  to  render  it  valid  ?  Are 
the  offices  of  clergymen  or  magistrates  required  for  such  purpose  ?  How 
may  marriage  be  inferred  ?  How  far  are  marriages  valid  that  are  solem- 
nized in  accordance  with  the  law  of  the  place  in  which  they  occur  ? 
Are  they  valid  by  the  laws  of  the  State  of  which  they  are  an  evasion  ? 
Is  this  the  same  principle  that  prevails  in  other  contracts  ?  What  causes 
the  difference  ? 

PART  in. 

HtrSBAOT)   AND    WTFE. 

§  T38.  The  legal  principles  applicable  to  this  relation, 
and  the  rights  and  duties  reciprocally  flowing  from  it,  are 
of  vast  importance  as  they  pervade  all  the  domestic,  and 


EIGHTS   OF   HUSBAIO)   UPON   MAEKIAGE.  447 

many  of  the  business  concerns  of  life.  The  one  great  prin- 
ciple lying  at  the  foupdation  of  this  relation,  and  from  which 
all  the  others  are  more  or  less  directly  derived,  consists  in  the 
merger  of  the  wife  in  the  husband,  and  the  entire  suspen- 
sion, during  its  continuance,  of  the  legal  existence  of  the 
former.  It  is  true  that  equity,  for  certain  purposes,  keeps 
alive  the  capacity  of  the  "wife,  but  the  common  law  gives 
her  no  original  power  or  authority. 

§  739.  Immediately  upon  marriage,  the  husband  becomes 
seized  of  a  life  estate  in,  and  entitled  to,  all  the  rents  and 
profits  of  her  real  estate  during  their  joint  lives ;  and  if, 
during  the  marriage  union,  she  have  issue  by  him  capable 
of  inheriting,  he  then  becomes  entitled,  as  tenant  by  the 
courtesy,  to  all  such  rents  and  profits  during  his  natural  life. 
All  her  personal  property  and  chattels  real  vest  in,  and  be- 
come the  property  of,  the  husband.  All  her  thmgs  in  pos- 
session become  as  much  his  property,  by  the  common  law, 
upon  the  fact  of  marriage,  as  if  he  had  inherited,  or  pur- 
chased and  paid  for  them. 

§  740.  As  to  the  wife's  choses  in  action,  or  debts  due  her 
at  the  time  of  the  marriage  on  bond,  note,  account,  or 
otherwise,  they  may  be  said  to  vest  only  conditionally  in 
the  husband  ;  that  is,  subject  to  his  reduction  of  them  to 
possession.  If  due,  and  recoverable  in  a  court  of  law,  he 
may  sue  and  recover  ;  and  having  worked  a  transfer  of  them 
from  action  into  possession,  they  arc  then  as  fully  his  own 
property  as  if  they  had  been  originally  choses  in  jyosscssion. 
But  if  he  dies,  the  wife  surviving  liim,  and  has  not  reduced 
them  to  possession,  they  revert  to  her,  and  she  becomes  re- 
possessed of  them,  and  restored  to  the  same  right  of  which 
the  marriage  deprived  her.  If  he  survives  her,  her  choses 
in  action  still  remaining,  and  not  reduced  to  possession,  arc 
recoverable  by  him  to  his  own  use,  by  acting  as  her  admin- 
istrator. Tlie  latter,  however,  are  regarded  as  assets  of  her's 
in  his  hands,  and  will  render  liim  liable,  as  far  as  they  go, 
to  the  payment  of  her  debts  contracted  before  marriage. 


448  LIABILITIES   AND   OBLIGATIONS   OF   HUSBAND. 

If  he  dies  before  having  reduced  them  to  possession,  they 
go  to  his  personal  representatives,  but  charged  still  with  the 
duty  of  being  applied  to  the  payment  of  her  debts  before 
marriage. 

§  741.  Whatever  of  the  wife's  choses  in  action  the  hus- 
band can  sue  for  and  recover  in  a  court  of  law,  he  may  re- 
duce to  possession,  and  if  he  chooses  squander  and  dissijoate, 
leaving  her  and  her  children  without  any  means  of  support. 
But  if  he  is  obliged  to  invoke  the  aid  of  a  court  of  equity 
to  gain  possession  ,or  control  of  her  property,  as  if  it  be  held 
in  trust  for  her  by  others,  or  even  if  it  be  a  legacy  left  to 
her,  or  a  distributive  share  in  an  estate,  such  court  of  equity 
will  first  require  him  to  make,  out  of  the  property,  a  suitable 
provision  for  her  maintenance,  before  he  can  be  allowed  to 
take  possession. 

§  742.  The  liabilities  of  the  husband  are  also  peculiar. 
He  is  liable,  during  her  life,  to  discharge  all  her  debts  and 
obligations  at  the  time  of  the  marriage,  whether  he  received 
with  her  any  property  or  not.  This  has  been  complained 
of  as  a  hardship,  but  as  a  compensation,  her  death  releases 
him  entirely  from  all  such  obligations,  although  he  may 
have  received  with  her  more  than  ten  times  sufficient  to  pay 
all  her  debts,  and  they  all  remain  imj)aid. 

§  743.  His  obligations  are  to  provide  her  with  necessaries 
suitable  to  her  situation  and  his  condition  in  life,  and  she 
may  contract  debts  for  that  purpose  which  he  will  be  liable 
to  pay.  But  he  is  chargeable  for  nothing  beyond ;  and  a 
merchant  lending  money  to  the  wife,  or  furnishing  and 
charging  goods  to  her,  could  not  compel  the  husband  to 
pay.  And  where  a  reasonable  allowance  is  made  by  the 
husband  to  the  merchant's  knowledge,  he  can  recover  for 
nothing  beyond.  The  husband  is  liable  for  necessaries  fur- 
nished the  wife  if  he  abandons,  or  lives  separate  from  her, 
having  made  no  provision  for  her  maintenance  ;  but  not  in 
case  of  her  elopement,  although  it  be  not  with  an  adulterer. 
Hence  all  persons  giving  a  credit,  even  for  necessaries,  to  a 


LEGAL   ABILITY   OF  WIFE   TO   CONTRACT.  449 

married  -woman,  liying  separate  from  her  husband,  should 
make  inqmries  into  the  real  cii'eumstances  of  the  case.  If, 
after  having  eloped,  the  wife  repents  and  returns,  the  hus- 
band will  be  bound  for  her  necessaries,  unless  she  have  com- 
mitted adultery.  McKutcJien  v.  McGahay,  11  John.  281. 
Govier  v.  Hancock,  G  T.  R.  603.  If  the  husband,  without 
just  cause,  turn  away  his  wife,  even  although  he  prohibit  the 
merchant  from  furnishing  her  with  necessaries,  on  his  credit, 
he  will  nevertheless  be  liable.  Jlouliston  v.  Smyth,  3  Bhujh. 
127.  If,  during  the  continuance  of  the  marriage  relation, 
the  wife  commit  tortious  or  fraudulent  acts  in  his  company, 
or  by  his  order,  he  alone  is  liable  ;  if  not  so  committed,  but 
they  are  her  separate  acts,  they  are  then  jointly  liable. 

§  744.  Many  cases  have  arisen  testing  the  wife's  ability 
to  contract,  and  render  herself  liable  at  law ;  and  also  her 
ability  to  acquire  property  and  rights,  while  living  separate 
from  her  husband  either  under  a  decree  of  the  court,  or  by 
an  arrangement  voluntarily  entered  into.  The  rule  is  well 
settled  that  She  possesses  this  ability  when  the  husband,  being 
a  foreigner,  has  abandoned  her,  and  resides  abroad.  It  is 
thought  the  rule  may,  also,  come  to  be  extended  to  embrace 
cases  where  the  husband  is  not  a  foreigner,  as  there  seems  to 
be  no  real  foundation  for  the  distinction.  The  rule  is  the  same 
where  the  husband  is  civiliter  mortuus,  civilly  dead.  It  is 
not  clearly  settled  whether  she  possesses  this  al)ility  when 
she  is  living  apart  from  her  husband  under  a  decree  of  the 
court  divorcing  her  a  mensa  el  thoro,  or  a  limited  divorce ; 
but  in  such  case  the  jurisprudence  of  Massachusetts  concedes 
to  her  the  ability.  Dea7i  v.  liichmond,  5  Pick.  4G1.  A 
great  contest  has  been  carried  on  in  the  English  courts  re- 
garding the  possession  of  this  ability  by  the  wife  where 
there  was  a  voluntary  separation,  and  the  wife  was  living 
apart  from  her  husband  under  a  deed  of  settlement  volun- 
tarily executed,  Tlie  Court  of  King's  Bench,  under  the 
lead  of  Lord  Mansfield,  in  Corldt  v.  Poclnitz,  1  Term. 
Rep.  5,  held  that  under  such  circumstances  she  possessed  the 
29 


450  WIFE   HOLDING   rKOPERTT   TnEOUGH   TKUSTEES. 

ability,  being  remitted  to  her  riglits  as  2.  feme  sole  or  single 
woman.  The  doctrine,  however,  was  questioned  in  several 
cases,  and  finally  distinctly  overruled  as  an  innovation  upon 
the  common  law  in  Marshall  v.  Rutton,  8  Term.  Rep.  545. 
The  doctrine,  as  now  understood  both  in  England  and  in 
this  country,  is,  that  such  circumstances  cannot  restore  the 
ability. 

§  745,  But  while  at  common  law  the  wife  is  so  effectually 
precluded  from  acquiring  any  property  or  rights  during  the 
husband's  life-time,  the  court  of  equity,  deriving  its  princi- 
j»les  from  the  civil  law,  offers  her  its  protection,  and,  under 
the  forms  which  give  it  jurisdiction,  afford  her  ample  secu- 
rity. These  forms,  or  one  class  of  them,  is  the  creation  of 
trusts.  Property  is  given  to  a  trustee  in  trust  for  the  wife, 
under  such  regulations  as  the  creator  of  the  trust  thinks 
proper  to  impose,  and  all  such  trusts  the  court  of  equity  will 
protect  and  enforce,  refusing  to  the  husband  and  his  creditor 
any  control  or  right  over  such  property.  The  husband  him- 
self may  be  the  trustee,  but  his  acts  in  reference  to  it  are 
under  the  direction  of  the  court.  The  property  may  come 
from  him,  and  any  stipulation  he  may  enter  into  before 
marriage,  although  with  her  individually,  without  the  inter- 
vention of  a  trustee,  equity  will,  after  marriage,  compel  him 
to  perform.  So  gifts  from  him  after  marriage,  equity  will 
support  as  her  separate  property,  provided  they  be  not  pre- 
judicial to  creditors.  And  in  cases  of  gifts  directly  to  the 
wife,  without  the  intervention  of  trustees,  equity  will,  on 
application,  often  appropriate  them  to  her  separate  use, 
creating  trusts,  when  necessary,  for  that  purpose. 

§  746.  ITie  question  here  naturally  arises  as  to  the  extent 
of  power  possessed  by  the  wife  over,  or  in  regard  to,  such 
separate  property.  The  rule  in  equity  is  very  liberal.  She 
is  there  regarded  as  sole  or  unmarried,  and  as  possessing,  in 
regard  to  her  separate  property,  essentially  the  same  rights 
as  if  her  husband  were  dead.  She  may  make  contracts  in 
relation  to  such  property  which  may  be  enforced  in  equity. 


wife's  endebtedness  and  powee  of  disposition.     451 

The  ground  on  whicli  a  creditor  is  held  authorized  to  pro- 
ceed against  the  separate  estate  of  a  married  -woman,  for  a 
debt  which  is  not  made  a  charge  upon  that  estate,  pursuant 
to  some  deed  of  settlement,  is  hy  showing,  cither  that  the 
debt  was  contracted  for  the  benefit  of  her  separate  estate,  or 
for  her  own  benefit  upon  the  credit  of  the  separate  estate. 
Curtis  V.  Engel,  2  Samlf.  Chan.  Bcjp.  2S7.  But  if  sucli 
debt  is  properly  incurred,  equity  makes  no  personal  decree 
against  her  for  its  payment.  It  only  applies  to  that  purpose 
her  property  in  the  hands  of  her  trustee.  The  decree  is  in 
rem^  and  charges  her  estate,  and  not  herself. 

§  74:7.  But  although,  during  the  continuance  of  the  mat- 
rimonial state,  debts  of  this  character  may  accrue,  and  be 
thus  enforceable,  and  even  a  debt  contracted  during  that 
state,  may  be  held  as  prima  facie  evidence  of  an  apiioint- 
ment  or  appropriation  of  her  separate  estate  to  its  payment ; 
yet  it  is  entirely  different  with  debts  of  lier's  existing  at  the 
time  of  the  marriage.  In  the  latter  case,  all  remedy  against 
her  separate  property  is  suspended  by  the  marriage.  And 
hence  where  a  woman  married,  owing  debts  at  the  time,  and 
owning  bank  stock,  which  lattft,*,  with  the  consent  of  the 
husband,  and  without  any  fraud,  was  transferred  to  a  trustee 
for  her  own  separate  use,  it  was  held  that  in  the  abscnsc  of 
any  act  of  her's,  after  the  marriage,  indicating  an  intention 
to  charge  this  fund,  the  creditor  coidd  not,  in  equity,  reach 
and  appropriate  it  to  the  payment  of  his  debt.  Vander- 
heyden  v.  Mallorr/,  1  Comst.  452. 

§  748.  Tlie  power  of  disposition,  possessed  by  the  wife, 
is  not  a  matter  of  arbitrary  exercise.  It  must  be  according 
to  the  mode  prescribed  by  the  instrument  under  whicli  she 
claims  the  property.  If  the  power  of  appointment  is  to  be 
exercised  by  will,  she  cannot  do  it  by  deed,  and  so  the  re- 
verse. At  least  this  was  the  earlier  doctrine,  but  in  the 
f  jurisprudence  of  New  York  it  is  now  settled  in  her  liighest 
court,  that  although  a  particular  mode  of  disi)osition  be 
pointed  out  in  the  instrument,  yet  that  would  not  precludo 


452  wife's  rowEK  of  disposing  by  will. 

tlie  wife  from  adopting  any  other  mode  of  disposition,  unless 
slie  was  by  the  instrument  itself  specially  restrained,  in  her 
power  of  disposition,  to  a  particular  mode.  Jaques  v.  The 
Methodist  Episcopal  Church,  IT  Johii.  548. 

§  Y49.  A  wife  may,  in  equity,  contract  with  her  husband, 
after  marriage,  for  transfers  of  property,  provided  it  be  done 
in  good  faith,  and  such  contract  will  be  enforced.  She  may 
unite  with  her  husband  in  conveyances  of  real  estate,  or  sho 
may  release  separately  her  right  of  dower  to  his  grantee ; 
but  any  such  conveyance  or  release  will  be  inoperative  to 
transfer  title  unless  she  make  the  proper  acknowledgment 
before  a  commissioner.  This  mode  is  prescribed  by  statute, 
and  is  the  only  one  by  which  she  can  legally  divest  herself 
of  her  real  estate.  If,  during  the  marriage  relation,  she  be- 
comes a  party  to  a  deed  containing  covenants,  they  cannot 
be  enforced  against  her  after  the  death  of  her  husband. 
Fowler  V.  Shearer,  7  Mass.  21.     . 

§  750.  Although  a  married  woman  may,  in  equity,  dis- 
pose of  her  separate  estate,  and  create  valid  charges  upon 
it,  which  may  be  enforced ;  yet  in  the  State  of  New  York 
and  several  other  States,  sh^is  incapacitated  by  statute  from 
making  any  last  will  and  testament.  She  may,  however,  by 
the  permission  of  her  husband,  make  a  disposition  in  the 
nature  of  a  will,  of  personal  property  placed  for  her  separate 
use  in  the  hands  of  trustees.  And  so  also  by  virtue  of  a 
power  reserved  prior  to  marriage,  under  an  agreement  with 
her  intended  husband,  she  may  be  enabled,  at  any  time 
during  the  marriage  relation,  by  executing  the  power,  to 
make  a  disposition  of  her  property  in  all  respects  similar  to 
that  made  by  a  last  will  and  testament ;  and  if  made  in  pur- 
suance of  such  reserved  power,  equity  will  carry  it  into 
eflect,  although  it  be  given  to  her  husband,  or  to  others,  to 
the  exclusion  of  her  heirs  at  law. 

§  751.  Ante-nuptial  agreements  made  in  contemplation 
and  consideration  of  marriage  are  valid,  and  theu'  specific 
performance  will  be  enforced  in  equity.     Marriage  is  itself 


MARRIAGE   SETTLEMENTS.  453 

a  valuable  consideration  to  support  such  an  agreement.  So^ 
also,  settlements  made  after  marriage,  but  in  pursuance  of 
an  agreement  entered  into  previous  to  it,  Tvill  be  enforced 
both  as  against  creditors  and  purchasers.  And  a  settlement 
made  after  marriage  may  be  good,  if  made  upon  a  valuable 
consideration,  as  upon  receiving  equitable  property  from  the 
trustees  of  the  wife.  The  amount  of  the  consideration  in 
such  a  case  would  be  inquirable  into,  and  to  sustain  it  must 
bear  a  reasonable  proportion  in  vahie  to  that  of  the  property 
settled.  Even  voluntary  settlements,  made  without  any 
consideration,  are  good  as  against  the  party  making  them, 
but  may  be  decreed  void  as  against  creditors  existing  at  the 
time.  Tliey  will  be  good,  however,  as  to  subsequent  credi- 
tors, if  made  without  any  fraudulent  intent.  These  settle- 
ments are  good  as  between  the  parties,  only  on  the  condition 
that  they  contemplate  the  contLauance  of  the  marriage  rela- 
tion. Where  they  are  made  with  a  view  ♦to  a  separation, 
they  come  imder  a  different  principle.  The  law  does  not 
authorize  a  voluntary  agreement  for  a  separation  between 
husband  and  wife.  Tlie  wife,  it  is  said,  cannot  make  a  valid 
agreement  with  the  husband,  for  a  separation  in  violation 
of  the  marriage  contract,  except  under  the  sanction  of  courts 
of  equity,  and  except  in  the  cases  where  the  conduct  of  the 
husband  would  have  entitled  her  to  a  separation.  Rogers 
V.  Ivogers,  4  Paige,  516. 

§  752.  The  husband  and  wife  cannot  be  witnesses  for  or 
against  each  other  in  a  civil  suit.  Tliis  is  based  upon  public 
policy.  They  cannot  be  witnesses  for  each  other,  because 
they  are  one  in  interest ;  nor  against  each  other,  as  it  might 
disturb  the  marriage  relation.  Nor  can  they  be  witnesses 
against  each  other  in  criminal  prosecutions,  or  criminal 
complaints,  except  that  the  wife  may  make  affidavit  agahist 
the  husband  in  case  of  threatened,  or  apprehended,  or  actual 
violence.  The  declarations  of  the  wife  arc  evidence  against 
the  husband,  wherever  she  is  shown  to  be  acting  as  his 
agent.     While  acting  in  such  capacity,  she  may  bind  tho 


454  •vvtfe's  EiGms  under  legislation. 

liusband  by  licr  contract ;  and  in  those  dcjiartmcnts  of  liis 
liouscliold  wliicli  are  under  lier  control,  a  jury  may  infer  her 
agency.  Tlic  acquiescence  of  the  husband  with  knowledge, 
would  be  sufficient  evidence  of  authority.  The  husband  is 
bound  to  maintain  and  protect  the  wife,  and  with  that  view 
the  law  gives  him  control  over  her  person,  and  he  may  even 
put  some  restraints  upon  her  liberty,  if  her  conduct  be  such 
as  to  require  it. 

§  753.  The  relations  of  husband  and  wife,  thus  briefly 
considered,  are  those  only  derived  from  the  common  law  or 
equity.  These  are  subject  to  be  interfered  with  by  legisla- 
tion. Tlie  tendency  of  late  years  has  been  in  the  direction 
of  emancipating  the  wife  from  the  dominion  of  the  common 
law,  and  of  enabling  her  to  own  property,  and  to  possess 
the  rights  incident  to  such  ownership.  The  State  of  New 
York  has  effected  a  very  complete  emancipation.  By  the 
acts  of  1848  and  '49,  she  was  vested  with  all  the  rights  of  a 
single  woman  as  to  the  ownership  of  property  that  she  might 
inherit,  or  which  might  descend  to  her  by  devise  or  bequest, 
or  which  might  be  given  to  her  by  any  person  other  than 
her  husband.  By  the  act  of  1859,  her  earnings,  in  like 
manner,  are  also  made  her's,  so  that  now,  in  relation  to 
property  and  its  rights,  she  occupies  quite  an  independent 
position. 

QUESTIONS. 

"What  is  the  one  great  principle  lying  at  the  foundation  of  the  rela- 
tion of  husband  and  wife  ?  What  does  e.quity  do  ?  "What  the  common 
law  ?  "What  occurs  immediately  upon  marriage  ?  "What  the  husband's 
rights  consequent  thereon  ?  "When  does  tenancy  by  the  courtesy  occur  ? 
"What  becomes  of  her  personal  property  and  chattels  real  ?  "What  of  all 
her  things  in  possession?  "What  becomes  of  her  choses  in  action? 
"What  the  husband's  rights  if  such  are  due,  and  recoverable  in  a  court  of 
law  ?  "What,  if  he  dies  without  having  reduced  them  to  possession  ? 
"What,  if  he  survives  her,  and  her  choses  in  action  are  not  yet  reduced 
to  possession?  How  are  what  is  recovered  regarded  in  his  hands? 
"What  will  they  render  him  liable  for  ?  "What  if  he  die  before  their  re- 
duction to  possession  ?    How  may  he  dispose  of  what  he  may  recover  at 


QUESTIONS.  455 

law  ?  What  if  he  have  to  invoke  the  aid  of  a  conrt  of  equity  ?  What 
are  the  liabilities  of  the  hubsand  ?  What  releases  hiin  from  liability  ? 
What  his  obligation  as  to  providing  necessaries  ?  What  beyond  ?  llow, 
•where  reasonable  allowance  is  made  ?  What  liability  if  husband  aban- 
dons, or  lives  separate  from  her  ?  What  liability  if  she  clupe  and  re- 
turn ?  What,  if  he  turn  her  away,  and  forbid  any  trusting  her  ?  What 
liability  for  tortious  or  fraudulent  acts  committed  by  her  ?  When  does 
the  wife  possess  an  ability  to  contract  at  law  ?  Uow,  when  hving  apart 
under  a  decree  of  the  court  ?  IIow,  when  living  apart  under  a  voluntary 
separation?  In  what  cases  does  equity  protect  the  wife ?  Under  what 
form  does  it  protect  her  property  ?  Who  may  bo  trustee  ?  From  whom 
may  the  property  come  ?  What  stipulations  will  equity  compel  him  to 
perform  ?  IIow  as  to  gifts  from  him  after  marriage  ?  IIow  as  to  gifts 
without  intervention  of  trustees  ?  How  is  the  wife  regarded  in  diuity  ? 
What  her  power  of  contracting  ?  What  the  ground  of  her  liability  for 
debt  ?  How  does  equity  enforce  payment  ?  Are  debts  existing  at  the 
time  of  the  marriage  thus  enforceable  ?  What  illustration  ?  Uow  is 
the  power  of  disposition  exercised  by  the  wife  ?  If  a  particular  mode 
be  pointed  out  by  the  instrument,  is  she  precluded  from  adopting  any 
other  mode?  And  if  so,  when?  With  whom  may  a  wife,  in  equity, 
contract  after  marriage  ?  IIow  may  she  convey  real  estate  and  dower 
right  ?  What  liability  if  a  party  to  a  deed  containing  covenants  ?  What 
prevents  her  making  a  last  will  and  testament  ?  What  may  she  do  by 
permission  of  hei  husband  ?  IIow  may  she  reserve  a  power,  and  when 
execute  it  ?  And  with  what  effect  ?  What  are  ante-nuptial  agreements, 
and  how  enforced  ?  IIow  is  it  with  settlements  made  after  marriage  in 
pursuance  of  previous  agreements?  How,  if  without  previous  agree- 
ment ?  How  with  voluntary  settlements  made  without  any  considera- 
tion? When  good  as  to  subsequent  creditors?  On  what  condition  are 
they  good  as  between  the  parties?  How,  where  made  with  a  view  to  a 
separation?  What  does  the  law  not  authorize?  Subject  to  what  con- 
dition, and  in  what  case,  can  an  agreement  for  a  separation  be  deemed 
valid  ?  What  is  the  rule  as  to  husband  and  wife's  being  witnesses  for  or 
against  each  other  in  civil  suits  ?  What  the  reason  of  the  rule  ?  Whal 
the  ride  in  criminal  prosecutions  and  complaints?  What  exception? 
When  are  declarations  of  the  wife  evidence  against  the  liusbaud  ?  When 
may  she  bind  tlie  husband  by  her  contracts  ?  What  is  the  husband's 
duty  as  to  maintenance  and  protection  ?  Wliat  ])owcrdoos  the  law  give 
him  as  to  control  and  restraint?  What,  for  some  tinu-,  lias  been  the 
tendency  of  legislation  as  to  this  relation  ?  AS'hat  legislation,  and  when, 
and  to  what  effect,  in  the  Stato  of  New  York  i 


456  pabent's  obligations  and  rowEis. 

PARJ  IV. 

PAEENT  AND  CniLD. 

§  754.  The  riglits  and  reciprocal  obligations  flowing  from 
this  relation,  which  are  of  a  character  enforceable  at  com- 
mon law,  are  not  numerous  or  difficult  to  be  understood. 
During  the  child's  minority,  the  parent  is  bound  to  provide 
reasonably  for  his  maintenance  and  education,  and  actions 
may  be  sustained  against  him  for  necessaries  furnished,  and 
schooling  given,  to  the  child.  The  doctrine  has  generally 
been  understood  to  be,  that  the  father  is  bound  to  support 
his  minor  children,  if  he  be  of  sufficient  ability,  even  al- 
though they  have  property  of  their  own.  But  this  doctrine 
has  no  application  to  the  mother,  and  in  regard  to  the  father 
there  has  been  so  much  relaxation,  that  it  is  very  question- 
able whether  it  would  now  be  enforced.  The  legal  obliga- 
tion, however,  ceases  on  the  arrival  of  the  child  at  his  ma- 
jority, however  wealthy  the  father  may  be.  It  is  essential 
to  show  an  authority,  either  actual  or  implied,  in  order  that 
a  father  may  be  held  bound  for  debts  contracted  by  the  son. 
The  parent  is  to  be  the  judge  of  what  is  necessary  for  the 
child,  and  no  third  person  will  be  justified  in  furnishing 
necessaries  and  charging  them  to  the  father,  without  show- 
ing, on  the  part  of  the  latter,  a  clear  omission  of  duty.  If 
a  father  forces  his  minor  children  from  home,  he  will  be  lia- 
ble for  their  necessaries.  The  obligations  resting  on  the 
parent  to  furnish  necessaries,  naturally  results  in  giving  him 
the  custody  of  their  persons,  and  the  value  of  their  labor 
and  services  during  their  minority.  While  they  live  with 
him,  and  are  maintained  by  him,  he  should  in  retm'n  be  en- 
titled to  their  labor  and  services. 

§  755.  The  parent  is  vested  with  the  power  of  subjecting 
his  minor  children  to  such  discipline  as  he  may  conceive 
essential  to  enable  him  to  discharge  the  important  trusts 
devolved  upon  him.    Although  the  father,  as  a  general  rule, 


step-father's  obligations.  457 

is  entitled  to  the  custody  of  liis  minor  children,  yet  the  courts 
have  always  exercised  a  discretion,  and,  if  in  their  judgment, 
beneficial  to  the  child,  have  confided  it  to  the  mother,  or 
even  taken  it  from  both,  and  placed  it  elsewhere.  So 
strongly  does  the  law  recognize  the  right  in  the  father, 
where  no  circumstances  conflict,  that  he  may,  by  will,  create 
a  testamentary  guardian,  to  wliom  the  custody  of  his  minor 
children  may  be  confided  after  his  death.  If  he  creates  no 
such  guardianship,  and  dies  during  their  minority,  the 
mother  is  entitled  to  the  guardianship  of  the  person,  and  in 
some  cases  of  the  estate  of  the  infant,  until  its  arrival  at  the 
age  of  fourteen,  when  it  can  choose  a  guardian  for  itself. 

§  T56.  A  step-father  is  not  legally  entitled,  either  to  the 
custody,  or  the  services,  of  the  children  of  his  wife  by  a 
former  husband.  He  is  under  no  obligations  to  maintain 
them.  But  if  he  receive  them  into  his  family,  and  treat 
them  as  his  own  children,  he  is  not  liable  to  them  in  an 
action  for  services  rendered  to  liim  during  their  minority, 
although  the  value  of  such  services  may  exceed  the  expenses 
of  their  education  and  support.  Williams  v.  Hutchinson^ 
3  Comst.  312.  And  as  a  step-father  is  not  legally  entitled 
to  the  labor  and  services  of  a  step-daughter,  he  cannot  main- 
tain an  action  against  another  for  her  seduction.  Bcntley 
V.  Bichtmyery  4  Comst.  38. 

QUESTIONS. 

What  arc  the  obligations  of  the  parent  during  the  chiUrs  minority  ? 
When  docs  the  legal  obligation  cease  ?  What  must  bo  shown  to  hold  a 
father  bound  for  debts  contracted  by  the  sou  ?  Who  judges  of  what  is 
necessary  for  the  child  ?  What  must  a  third  person,  furnishiug  necessa- 
ries, show  to  charge  the  father  ?  What  if  a  father  force  his  minor 
children  from  home  ?  What  do  the  obligations  resting  on  the  parent 
give  him?  What  power  in  relation  to  discipline?  What  in  relation  to 
the  custody  of  minor  children  ?  What  right  of  the  father  to  create  tes- 
tamentary guardian  ?  What  if  ho  die  without  creating  such?  Wliat 
are  a  step-father's  rights  and  obligations  as  to  step-children  ?  When  i* 
he  not  liable  for  services  rendered  by  them  ? 


458  CAKONIOAL  AND  CIVIL  DISABILITIES. 

PART  V. 

D  I  V  O  E  0  E  . 

§  757.  The  marriage  tie,  once  entered  into,  creates  on 
tLe  j)art  of  each  partj,  a  perpetual  obligation.  Nothing 
but  death  or  divorce  can  dissolve  it.  The  means  or  manner 
by  whicb  the  latter  is  obtained  varies  in  different  S.tates. 
In  some  it  is  by  the  act  of  tbe  legislature.  In  others,  by  a 
decree  of  a  court.  In  several  of  the  States  there  are  two 
different  species  of  divorce ;  the  one,  a  Tnensa  et  thorOf  a 
limited  one ;  wMcli  depends  upon  the  decree  of  the  court' 
granting  it,  and  wliieli  may,  whenever  circumstances  re- 
quire it,  be  vacated.  The  other,  a  vinculo  matrimonii,  a 
final  one ;  releasing  from  the  bond  of  matrimony.  The  first 
is  of  statutory  creation,  and  can  only  arise  from  causes 
authorized  by  statute.  The  second  may  be  granted  for 
canonical  and  civil  disabilities,  and  also  for  whatever  other 
causes  the  statute  may  authorize.  The  canonical  disabilities 
are  consanguinity,  affinity,  and  physical  incapacity  exist- 
ing prior  to  marriage,  and  which  have  the  eff'ect  of  render- 
ing the  marriage  voidable  at  the  election  of  one  of  the  par- 
ties, but,  if  not  annulled  during  life,  cannot  be  declared  void 
afterwards.  The  civil  disabilities  are,  a  prior  marriage,  or 
idiocy,  which  renders  the  contract  void,  ccb  initio.  The  whole 
matter  is  generally  regulated  by  statute,  which  usually  de- 
clares the  causes  which  will  authorize  the  dissolution  of  the 
maiTiage  tie.  And  these  causes  are  different  in  the  difi'erent 
States.  In  !N'ew  York  they  are  the  non-attainment  of  the 
age  of  legal  consent ;  a  former  marriage  still  in  force ;  idiocy 
or  lunacy  of  one  of  the  parties ;  the  obtaining  of  consent 
by  force  or  fraud ;  and  physical  incapacity.  These,  exist- 
ing at  the  time  the  marriage  was  formed,  annul  the  marriage 
contract,  ah  initio.  Adultery  is  also  a  cause  that  may  sub- 
sequently accrue,  and  authorizes  a  divorce,  a  vinculo,  subject 
to  the  condition  stated  in  the  statute.    But  neither  party 


LIMITED  OK  QUALIFIED  DIVOE0E8.  450 

can  obtain  a  divorce  for  this  cause,  if  the  other  recriminates, 
and  can  prove  the  commission  of  a  similar  ofience.  h>o,  also, 
if  the  injured  party,  suLsequent  to  the  adultery,  cohabits 
with,  or  is  reconciled  to,  the  other,  after  just  grounds  of 
belief  in  the  fact,  it  will  constitute  a  bar  to  the  divorce. 
The  husband  will  also  be  precluded  from  obtaining  the  di- 
vorce if  the  adultery  occur  through  his  active  procurement, 
or  passive  and  conscious  toleration  of  his  wife's  guilty  con- 
duct. 

§  Y58.  The  limited  or  qualified  divorces,  a  mema  et  thoro, 
prevail  in  most  of  the  States,  usually  as  an  incident  to  the 
remedial  powers  exercised  by  the  courts  of  chancery.  They 
also  prevail  in  England.  In  England  either  party  may  ap- 
ply for  them,  but  in  this  country  the  wife  is  usually  the  only 
applicant.  Their  efiect  is  to  suspend,  either  indefinitely,  or 
for  a  limited  time,  the  marital  relations,  and  to  decree  a 
separation  from  bed  and  board,  generally  with  a  provision 
for  the  wife's  support.  Tlie  most  usual  causes  upon  which 
the  decree  is  granted,  are  cruel  and  inhuman  treatment  on 
the  part  of  the  husband.  There  has  been  some  difficulty  in 
determining  how  far  this  must  go  to  justify  the  interference 
of  the  court  in  disturbing  such  important  relations.  It  need 
not  go  to  the  extent  of  cruelty,  but  may  be  granted  for  such 
conduct,  on  tlie  part  of  the  husband,  as  renders  it  unsafe 
and  improper  for  the  wife  to  cohabit  with  him,  and  be  under 
his  dominion  and  control.  The  word  unsafe  may  mean 
reasonable  apprehensions  of  bodily  hurt,  l^ut  the  danger  nmst 
be  serious,  and  no  mere  austerity  of  temper,  petulcnce  of 
manners,  rudeness  of  language,  or  even  sallies  of  passion, 
which  threaten  no  bodily  harm,  can  be  sufticicnt.  Tlie 
children  begotten  and  bom  dm-ing  such  sejiaration,  arc 
deemed  illegitimate,  and  hence  incai)able  of  inheriting 
property.  » 

§  Y59.  Tlie  most  difficult  and  complicated  questions  con- 
nected with  this  subject  arise  out  of  the  cft'ect  to  be  given 
to  foreign  divorces.    The  principle  is  not  doubted  but  that 


460     MAKRIAGE   IN    ONE   STATE   AND   DIVOECE   IN   ANOTHER. 

divorces  regularly  obtained  in  the  courts  of  the  State  or 
country  where  the  jjarties  were  regularly  married  and  do- 
miciled, are  valid  everywhere."  There  is  just  as  little  doubt 
but  that  a  party  domiciled  in  one  State,  and  going  into 
another  and  there  obtaining  a  divorce  in  fraud  of  the  laws 
of  the  State  of  his  domicil,  would  be  unable  to  avail  himself 
of  it  as  a  valid  divorce  in  the  latter  State.  Tliis  question 
has  frequently  been  presented.  Divorces  are  much  more 
easily  obtained  in  some  States  than  in  others.  One  of  the 
married  parties  removes  into  another  State,  where  divorces 
are  easily  obtained,  for  the  sole  and  express  purpose  of  pro- 
curing one ;  and  having  done  so,  returns  to  the  State  he 
left  single,  and  a  candidate  for  the  formation  of  new  ties. 
How  is  such  a  divorce  regarded  in  the  State  to  which  he 
returns  ?  As  having  been  obtained  iikfraud  of  its  laws,  and 
hence  a  mere  nullity.  Hanomr  v.  Turner^  14  Mass.  227. 
Borden  v.  Fitch,  15  John.  121. 

§  760.  But  a  question  of  great  difficulty  is  presented  in 
the  case  where  parties  married  in  one  State,  procure  a  di- 
vorce in  another,  after  submitting  to  its  jurisdiction,  and 
after  a  full  and  fair  investigation  of  the  merits  of  the  ques- 
tions involved.  Is  such  a  divorce  valid  in  the  State  where 
the  parties  had  their  former  home  ?  The  question  has  seve- 
ral times  arisen  in  Scotland,  where  parties,  one  or  both, 
having  had  their  homes  in  England,  either  with  or  without 
acquiring  a  domicile  in  Scotland,  apply  for  a  divorce  under 
the  laws  of  Scotland.  In  Utterton  v.  Tewsh,  Fergusson^s 
jRejp.  23,  English  parties  domiciled  in  England,  and  having 
acquired  no  domicile  in  Scotland,  one  of  them  applied  for  a 
divorce  under  the  Scottish  law.  The  Consistorial  Court  in 
Scotland  refused  to  grant  it.  But  that  decision  was  reversed 
on  appeal,  and  the  divorce  dn-ected  to  be  granted.  In  Fd- 
mondstone  v.  Lockhart,  Fergusson,  209,  parties  originally 
English,  and  married  in  England,  had  domiciled  in  Scotland, 
where  a  divorce  was  applied  for,  and  the  question  was 
whether  the  lex  loci  contractus  or  the  lex  domicilii  was  to 


QUESTIONS.  4G1 

govern.  The  court  of  review  decided  in  favor  of  the  latter. 
The  question  finally  came  before  the  Iloiise  of  Lords  in 
England  in  the  case  of  Tovey  v.  Lindsay^  1  Dows  Bcp. 
117,  in  which,  although  the  case  was  remitted  back  for  re- 
view without  any  final  decision,  yet  the  view  taken  of  the 
question  was,  that  the  lex  loci  contractus  must  govern  in  all 
such  cases,  and  that  the  Scottish  tribunals  could  only  pro- 
nounce%the  divorce  according  to  English,  and  not  to  Scottish 
law.  The  question  has,  however,  been  before  the  House  of 
Lords  in  a  more  recent  case,  that  of  Warrendcr  v.  Warren- 
der^  9  Bligh,  89,  in  which,  under  the  lead  of  Lord  Chan- 
cellor Broughara^  the  Scotch  decision  in  Edmondston^  v. 
Loclcliartf  was  confirmed,  and  the  lex  domicilii  declared  to 
be  the  law  which  the  court  should  apply  to  such  cases.  The 
principle  of  this  decision  would  enable  the  judicial  tribu- 
nals of  the  State  where  the  x^arties  were  domiciled,  to  grant 
divorces  valid  under  their  own  laws,  in  whatever  State  the 
man-iage  may  have  been  entered  into.  But  this  question 
may  not,  perhaps,  be  considered  as  entirely  settled,  espec- 
ially in  the  jurisprudence  of  this  country. 

QUESTIONS. 

What  effect  has  the  marriage  tie  onco  entered  into  ?  How  may  a 
divorce  be  obtained  ?  How  many  different  species  of  divorce  ?  What 
are  they  ?  How  created  ?  "What  are  canonical  disabilities  ?  What  are 
civil  disabilities?  What  is  the  whole  matter  generally  regulated  by? 
What  are  the  causes  for  divorce  in  New  York?  What  causes  existing 
before  marrioge?  What  of  subsequent  occurrence?  What  will  prevent 
a  party  from  obtaining  a  divorce  for  adultery  ?  What  are  limited  di- 
vorces incident  to  ?  Which  party  here  applies  for  them  ?  Wliat  is  their 
effect  when  granted ?  What  are  the  most  usual  causes?  What  kind  of 
conduct  will  justify  such  divorce?  What  gives  rise  to  the  most  serious 
questions  ?  What  principle  is  not  doubted  ?  What  otlier  is  also  clear  ? 
What  state  of  facts  illustrates  it?  In  a  case  where  the  marriage  takes 
place  in  one  State  or  country,  and  a  divorce  is  applied  for  in  another, 
where  the  parties  are  domiciled,  which  is  the  law  applied,  the  lex  loci 
contractus  or  the  lex  domicilii  f    What  cases  in  illustration  ? 


APPENDIX. 


FOKMS. 


The  following  forms  have  been  selected  as  those  of  the  most 
common  use  in  business  transactions.  The  principles  that  apply 
to,  and  govern  the  most  of  these,  will  be  found  stated  in  the  course 
of  this  work.  There  is,  however,  an  exception  in  the  case  of 
Deeds,  Mortgages  and  Wills,  and  hence  a  few  remarks  upon  those 
topics  may  not  be  inappropriate. 

Deeds  in  the  State  of  New  York  must  be  under  seal,  and  in 
order  to  be  available  against  a  subsequent  purchaser  or  incum- 
brances, must  be  duly  acknowledged  and  recorded  in  the  County 
Clerk's  Office,  A  deed,  to  be  effectual,  must  not  only  be  executed 
under  seal,  and  in  the  presence  of  at  least  one  witness,  but  must 
also  be  delivered  either  directly  to  the  grantee,  or,  as  an  escrow,  to 
some  third  person,  to  take  effect  upon  the  performance  of  some 
condition. 

A  deed  may  be  a  simple  quit-claim,  or  oite  with  covenants  of 
warranty.  In  the  former  case,  although  it  purports  to  convey  one's 
right  of  expectancy,  or  possibiUty  of  inheritance,  it  will  neverthe- 
less convey  only  the  title  which  the  grantor  actually  possessed  at 
the  time  of  its  execution  and  delivery.  Any  subsequently  accruing 
title  will  remain  unaffected  by  it. 


4G4  APPENDIX. 

A  deed  admits  of  no  implied  covenants,  and  hence  the  grantor 
can  be  held  to  no  act  or  thing  not  expressly  covenanted  in  the 
conveyance.  In  a  common  warrantee  deed,  containing  simply  cov- 
enants of  warranty  and  for  quiet  enjoyment,  the  grantee  must 
have  suffered  an  eviction  from  the  premises,  before  he  can  be  en- 
titled to  recover  against  his  grantor.  But  in  case  a  full  covenant 
deed  is  given,  or  one  containing  a  covenant  of  seizin,  that  is 
broken,  and  allows  an  action  to  be  brought  immediately  on  the  ex- 
ecution and  delivery  of  the  deed,  if  the  grantor  has  no  title. 

The  deed  cannot  convey  any  greater  estate  or  interest  than  the 
grantor  himself  possessed  at  the  time  of  its  delivery,  or  could  then 
lawfully  convey ;  but  it  may  always  be  set  up  as  conclusive  against 
the  grantor,  and  all  such  as  claim  from  him  by  descent. 

No  deed  can  be  available  to  the  grantee,  if  at  the  time  of  its 
execution  and  delivery,  the  premises  sought  to  be  conveyed,  are  in 
the  actual  possession  of  a  person  claiming  under  a  title  adverse  to 
that  of  the  grantor,  except  as  against  such  grantor  and  his  heirs. 
No  title  passes  to  the  grantee.  A  mortgage,  however,  may  be  exe- 
cuted under  such  circumstances,  which  may  be  good  from  the  time 
of  the  recovery  of  possession  imder  it. 

In  the  State  of  New  York  it  is  unnecessary  to  insert  the  term 
"  heirs,"  or  other  words  of  inheritance,  in  order  to  create  a  con- 
veyance in  fee ;  as  every  grant  of  real  estate  will  be  held  to  pass  all 
the  interest  of  the  grantor  therein,  unless  it  is  apparent,  by  its 
terms,  that  a  less  estate  was  intended  to  be  granted. 

A  consideration  is  necessary  to  sustain  a  deed,  although  the 
amount  of  it  is  immaterial,  and  in  the  description  of  the  premises 
conveyed,  known  and  fixed  monuments  on  the  land,  whether  nat- 
ural or  artificial,  will  be  held  to  control  in  preference  to  courses 
and  distances,  and  the  former  wiU  be  held  to  include  all  the  lands 
within  them,  although  they  are  found  to  vary  from  the  quantity 
expressed  in  the  deed. 


APPKNT)EX;.  4Go 

A  mortgage,  altliougli  for  some  purposes  deemed  a  conditional 
sale,  is  nevertheless  merely  a  lien,  and  is  regarded  simply  as  a  se- 
curity for  a  debt,  and  vests  no  title  in  the  mortgagee.  It  is  a  mere 
chattel  interest,  and  as  such,  on  the  death  of  the  mortgagee,  goes 
to  his  personal  representative,  and  not  to  his  heir  at  law.  It  does 
not,  of  itself,  imply  any  covenant  to  pay  the  sum  intended  to  be 
secured  by  it  ;^nd  hence  in  the  absence  of  any  such  covenant,  and 
of  any  bond  or  other  similar  instrument  accompanying  the  mort- 
gage, the  mortgagee  will  have  no  remedies  beyond  the  lands  de- 
scribed in  the  instrument. 

A  mortgage  given  by  the  grantee  on  the  purchase,  and  for  the 
purchase-money,  will  be  good  without  being  executed  by  the  wife 
of  the  mortgagor ;  as  the  seizin  in  him  of  the  land  is  subject  to 
his  mortgage  ;  but  in  all  other  cases  the  wife  must  unite,  in  the 
same  manner  as  in  a  deed,  or  her  right  of  dower  in  the  premises 
conveyed  will  not  be  barred. 

Where  large  quantities  of  land  are  covered  by  a  mortgage,  no 
part  can  be  sold  by  the  mortgagor  except  subject  to  its  lien  ;  but 
in  case  of  such  sale,  equity  will  interpose,  and  direct  that  the  part 
unsold  be  first  applied  in  payment  of  the  mortgage  debt,  and  if 
any  thing  still  remains  due  thereon,  that  then  the  portions  sold 
shall  be  applied  on  the  said  mortgage  debt  in  the  inverse  order  of 
their  alienation  ;  that  is,  that  the  part  last  sold  sliall  be  first  ap- 
plied on  said  debt,  and  so  on  until  the  said  debt  is  paid,  or  all  the 
mortgaged  premises  applied  towards  its  payment. 

A  mortgage,  like  a  deed,  must  be  duly  executed  in  the  presence 
of  a  witness,  or  ofiicer  taking  the  acknowledgment ;  must  be  duly 
acknowledged  and  properly  recorded  in  order  to  protect  the  mort- 
gagee against  subsequent  purchasers  and  incumbrances.  All  the 
mortgagee's  interest  in  it  may  pass  by  assignment  to  the  assignee, 
and  this  latter  need  not  be  acknowledged  nor  recorded,  as  the  re- 
cording of  the  mortgage  will  be  a  sufficient  protection  not  only  to  the 
30 


4:6Q  APPEITOIX. 

mortgagee,  but  to  all  his  assigns.  The  recordiBg  of  such  assign- 
ment is  not  held  to  be  such  notice  to  the  mortgagor  as  will  invali- 
date a  payment  made  by  him  to  the  assignor  subsequent  to  the  as- 
signment. The  assignee,  to  protect  himself  against  such  a  contin- 
gency, should  give  to  the  mortgagor  actual  notice  of  the  assign- 
ment. The  acknowledgment  and  recording  of  the  assignment 
would  have  the  effect  of  enabling  the  assignee,  upon  payment  of 
the  mortgage,  to  acknowledge  satisfaction,  so  as  to  have  the  same 
discharged  of  record.  Otherwise  the  original  mortgagee  will  be 
the  proper  party  to  acknowledge  the  satisfaction. 

The  remedies  upon  non-payment  of  the  mortgage  are  twofold, 
either  to  proceed  upon  the  personal  liability  of  the  mortgagor, 
where  a  note,  bond,- or  other  obligation  exists,  the  collection  of 
which  would  discharge  the  lien  of  the  mortgage  ;  or  to  proceed 
against  the  mortgaged  premises,  and  to  apply  them,  as  far  as  their 
proceeds  will  go,  in  part  or  entire  satisfaction  of  the  mortgage. 
If  any  balance  still  remains  due,  the  mortgagor  will  be  personally 
liable  to  pay  it,  and  if  the  property  brings  more  than  sufficient  to 
pay,  then  he  will  be  entitled  to  any  such  balance  as  may  remain 
after  payment  of  the  debt.  The  foreclosure  may  either  be  in  the 
Court  of  Chancery,  or  by  a  proceeding  under  the  statute,  by  virtue 
of  the  power  of  sale  contained  in  the  mortgage.  In  the  case  of  a 
chattel  mortgage,  the  more  common  course  is  for  the  mortgagee,  if 
he  desires  to  close  it  up,  to  give  the  mortgagor  notice  of  sale,  and 
also  to  give  reasonable  public  notice  of  the  time  and  place  of  sale, 
and  then  to  proceed  at  such  time  and  place  to  sell  the  property, 
and  apply  the  proceeds  upon  the  debt  secured, 

A  WILL  is  the  legal  declaration  of  a  man's  intentions  of  what 
he  wills  to  be  performed  after  his  death.  The  parties  competent  to 
make,  or  take  under  it,  and  the  manner  of  its  execution,  are  mat- 
ters of  statute  regulation.  In  the  State  of  New  York  all  persons 
except  idiots,  persons  of  unsound  mind,  married  women,  and  in- 


APPENDIX.  4G7 

fants,  may  devise  their  real  estate,  and  such  devise  may  be  made  to 
any  person  capable  by  law  of  holding  real  estate ;  but  no  de\-ise 
to  a  corporation  shall  be  valid,  unless  such  corporation  be  expressly 
authorized  by  its  charter,  or  by  statute,  to  take  by  devise.  All  de- 
vises to  aliens  are  declared  void.  It  was  always  competent  for 
married  women  to  devise  their  separate  property  under  a  power  re- 
served for  that  purpose,  and  now,  since  the  act  of  1849,  they  are 
declared  competent  to  convey  or  devise  their  separate  property. 

As  to  personal  property,  every  male  person  of  the  age  of  eight- 
een years  or  upwards,  and  every  female,  not  being  a  married  -wo- 
man, of  the  age  of  sixteen  years  or  upwards,  of  sound  mind  and 
memory,  may  dispose  of  such  property  by  will. 

In  the  State  of  New  York  every  last  wiU  and  testament  of  real 
or  personal  property,  or  both,  must  be  executed  and  attested,  in  the 
following  manner : 

1.  It  must  be  subscribed  by  the  testator  at  the  end  of  the  will. 
(This  is  held  to  mean  at  the  end  of  the  will  proper,  and  where  a 
map  of  lots  is  attached  to  it,  and  identified  in  the  body  of  it,  it 
need  not  be  signed.)  • 

2.  Such  subscription  must  be  made  by  the  testator,  in  the  pres- 
ence of  each  of  the  attesting  witnesses,  or  acknowledged  by  bim 
to  have  been  so  made  to  each  of  the  attesting  witnesses. 

3.  The  testator,  at  the  time  of  making  such  subscription,  or  at 
the  time  of  acknowledging  the  same,  must  declare  the  instrument 
so  subscribed  to  be  his  last  w^ill  and  testament. 

4.  There  must  be  at  least  two  attesting  witnesses,  each  of 
whom  must  sign  his  name  as  a  witness,  at  the  end  of  the  will,  at 
the  request  of  the  testator. 

(Two  witnesses  are  required  not  only  in  Xew  York,  l)ut  also  in 
Pennsylvania,  Delaware,  Virginia,  Ohio,  Illinois,  Indiana,  Missouri, 
Tennessee,  North  Carolina  and  Kentucky,  while  to  a  wUl  de\-ising 
real  estate,  three  are  required  in  Vermont,  New  Hampshire,  Maine, 


468  APPENDIX. 

Massachusetts,  Ehode  Island,  Connecticut,  New  Jersey,  Maryland, 
South  Carolina,  Georgia,  Alabama,  IMississippi,  Michigan,  Wis- 
consin and  Iowa.) 

5.  The  witnesses  to  any  will  must  write  opposite  to  their  names 
their  respective  places  of  residence ;  and  every  person  who  may 
sign  the  testator's  name  to  any  will,  by  his  direction,  must  wcite 
his  own  name  as  a  witness  to  the  will.  And  whoever  neglects  to 
comply  with  either  of  the  foregoing  provisions,  will  forfeit  fifty  dol- 
lars, to  be  recovered  by  any  person  interested  in  the  property  de- 
vised or  bequeathed,  who  may  sue  for  the  same.  Sucb  omission 
will  not  affect  the  validity  of  any  will ;  nor  will  any  person  liable 
to  the  penalty  aforesaid,  be  excused  or  incapacited,  on  that  ac- 
count, from  testifying  respecting  the  execution  of  such  will. 

A  codicil  is  an  addition  or  supplement  to  a  will,  and  must  be 
executed  with  the  same  solemnities.  It  is  regarded  as  a  part  of 
the  will,  the  two  instruments  making  together  but  one  will. 

The  statute  prescribing  the  manner  of  execution  has  a  very 
strict  construction  given  to  it,  both  as  to  the  will  and  codicil.  The 
testator  must,  in  the  prgsence  of  two  witnesses,  declare  the  instru- 
ment to  be  his  last  will  and  testament.  The  declaration  to  one, 
and  signing  it  in  the  presence  of  two,  who  subscribe  it  as  wit- 
nesses at  his  request,  is  insufficient.  And  so  also  where  the  tes- 
tator did  not  subscribe  the  instrument  in  their  presence,  and  the 
only  acknowledgment  was  "  I  declare  the  zoithin  to  be  my  toill  and 
deed,  it  was  held  iusufficient. 

Wills  devising  real  estate  must  be  executed  according  to  the 
formalities  prescribed  by  the  laws  of  the  place  where  the  real  es- 
tate is  situated,  but  a  wiU  of  personal  property  executed  according 
to  the  laws  of  the  place  of  the  testator's  domicil,  will  pass  all  the 
personal  property  of  the  testator  wherever  the  same  may  be  situ- 
ated. 

The  term  "  heirs,"  or  other  words  of  inheritance,  need  not  ba 


APPENDIX.  4G9 

inserted  in  a  will  designed  to  convey  an  estate  in  fee.  If  it  be  tbo 
intention  to  devise  a  less  estate,  appropriate  words  must  be  made 
use  of  for  that  purpose. 

A  will  continues  ambulatory,  or  subject  to  any  cbanges,  the 
testator  may  see  fit  to  make  in  it  during  bis  life.  Or,  he  may,  if 
he  choose,  cancel  and  destroy  it,  and  leave  his  property  to  be  dis- 
tributed as  the  law  prescribes.  And  if  be  makes  a  will,  and  leaves 
any  portion  of  his  property  undisposed  of  under'  it,  his  heirs  or 
next  of  kin  will  be  legally  entitled  to  it.  No  technical  words  are 
required  in  a  will,  and  the  intention  of  the  testator  is  to  be  gath- 
ered from  a  full  consideration  of  the  whole  instrument.  No  pro- 
vision in  a  will,  however  ample,  will  prevent  the  wife's  claiming,  in 
addition,  her  right  of  dower,  or  life  estate  in  one-third  of  all  the 
lands  of  which  the  husband  was  seized  during  the  coverture.  To 
prevent  both,  the  will  must  expressly  declare  that  the  devise  or 
bequest  is  made  in  lieu  of  dower,  and  then  the  wife  will  be  at  lib- 
erty to  elect  which  of  the  two  she  will  receive. 


ASSIGNMENTS. 
1.  Assignment  of  Judgment. 

Supreme  Court. — Judgment  for  $500.  Horace  j\r.  Hastings  to 
Samuel  Wood.  Cost  taxed  at  $lo.  Docketed  June  2,  18G0. 
Transcript  filed  in  Albany  County  Clerk's  Office,  June  3,  18G0. 

In  consideration  of  dollars  to  mo  paid  by  Thomas 

Simons,  of  the  city  of  Albany,  I  hereby  assign,  sell  and  transfer 
the  above-mentioned  Judgment  to  him,  his  heirs  and  assigns  for- 
ever, authorizing  him  to  collect  and  enforce  payment  of  the  same 
in  my  name  or  otherwise,  but  at  his  own  costs  and  charges,  and 
covenanting  that  the  sum  of  dollars,  besides  interest,  is 

now  due  on  the  same. 

Executed  this  tenth  day  of  August,  A.  D.  18G0, 

HORACE  M.  HASTINGS,    [l.  s.] 


470  APPENDIX. 

2.  Assignment  of  Mortgage.    Endorsed  Thereon. 

In  consideration  of  dollars  to  me  in  hand  paid  by 

George  W.  Palmer,  of  ,  I  do  hereby  sell,  assign,  transfer, 

and  set  over  unto  the  said  George  W.  Palmer  the  within  indenture 
of  mortgage,  together  with  the  bond  accompanying  the  same,  for 
his  use  and  benefit,  hereby  authorizing  him  to  collect  the  money 
due  on  the  same  in  my  name  or  otherwise,  but  at  his  own  costs  and 
charges,  covenanting  that  the  sum  of  dollars,  besides  in- 

terest, is  now  due  on  the  same. 

Executed  this  day  of  1860. 

PETER  D.  LUDINGTON,  [l.  s.] 

'   3.    Voluntary  Assignment  hy  an  Insolvent  Debtw\ 

This  Indenture  made  this  day  of  ,  in  the  year 

,  between  Elihu  J.  Granger,  of  ,  of  the  first 

part,  and  Allen  B.  Durant,  of  ,  of  the  second  part. 

Whereas  the  said  Elihu  J.  Granger  is  justly  indebted  in 
sundry  large  sums  of  money,  and  is  unable  to  pay  and  discharge 
the  same  with  punctuality,  and  in  full,  and  he  is  desirous  of  making 
a  fair  and  equitable  distribution  of  his  property  and  effects  among 
his  creditors, 

Now,  therefore,  this  Indenture  witnesseth,  that  the  said  Elihu 
J.  Granger,  in  consideration  of  the  premises,  and  of  the  sum  of 
one  dollar  to  him  in  hand  paid,  by  the  party  of  the  second  part,  the 
receipt  whereof  is  hereby  acknowledged,  hath  granted,  bargained, 
sold,  assigned,  transferred,  and  set  over ;  and  by  these  presents 
doth  grant,  bargain  and  sell,  assign,  transfer  and  set  over,  unto  the 
said  party  of  the  second  part,  his  heirs  and  assigns  forever,  all 
and  singular,  his  lands,  tenements  and  real  estate,  a  more  particu- 
lar description  of  which  is  hereto  annexed,  and  all  his  goods,  chat- 
tels, effects,  and  things  in  action,  of  every  name,  nature  and  de- 
scription, of  which  he  is  now  lawfully  possessed,  and  to  which  he 
may  be  entitled,  saving  and  excepting,  from  the  effect  of  this 
assignment,  all  such  articles  of  household  furniture,  and  other  ef- 
fects as  are  exempt  by  law  from  seizure  and  sale  under  execution, 
to  have  and  to  hold  the  same  unto  the  said  party  of  the  second 
part,  his  heirs  and  personal  representatives. 


APPESTDIX.  471 

In  trust,  however,  and  upon  the  following  uses  and  trusts,  that 
is  to  say.  The  said  party  of  the  second  part  shall  take  immediate 
possession  of  all  the  property  and  effects  herehy  assigned,  and  as 
fast  as  he  conveniently  can,  he  shall  sell  and  dispose  of  the  same, 
and  convert  the  same  into  money,  and  with  the  proceeds  thereof, 
shall  first  pay  off  and  discharge  all  the  reasonable  costs,  charges 
and  expenses  of  carrying  into  eflFect  this  assignment ;  and  all  rents, 
taxes,  assessments  and  interest  on  mortgages  that  may  be  neces- 
sary to  keep  and  protect  from  sacrifice  the  assigned  property,  and 
with  the  residue  the  said  party  of  the  second  part  shall 

First,  pay  and  discharge  in  full  the  several  and  respective  debts, 
bonds,  notes,  and  sums  of  money  due,  or  to  grow  due,  from  the 
party  of  the  first  part,  which  are  designated  and  stated  in  Sched- 
ule A  hereto  annexed ;  and  if  the  assigned  effects  are  insufficient 
to  pay  all  such  sums  in  full,  then  to  pay  the  same  pro-rata  as  far 
as  said  assigned  effiscts  will  go. 

[^The  assignor  reiay^  in  this  manner^  maTce  as  many  classes  of  preferred 
creditors  as  7ie pleases,  including  tliem  in  so  many  schedules  attached  to 
and  forming  apart  of  this  assignment.] 

Second.  By  and  with  the  residue  and  remainder  of  the  said 
net  proceeds  and  avails,  if  any  there  shall  be,^  the  said  party  of  the 
second  part  shall  pay  and  discharge  all  the  other  debts,  dues  and 
liabilities  of  the  said  party  of  the  first  part,  provided  such  remain- 
der shall  be  sufficient  for  that  purpose,  and,  if  insufficient,  then  to 
apply  the  same  pro-rata  so  far  as  the  same  will  go. . 

[7/*  the  assignment  is  ly  a  firm  or  co-imrtnership.,  the  direction  is  to 
apply  all  the  co-partnership  effects  to  the  payment  of  co-partnership 
debts,  and  if  any  lalance  remains,  to  apply  it  to  the  payment  of  the  in- 
dividual debts  of  each  co-partner.  And  if  the  individual  effects  of  each 
co-partner  are  also  assigned,  they  are  directed  to  be  ajjplied  first  to  the 
payment  of  the  individual  debts  of  each  partner  respectively,  and  any 
balance  remaining  should  he  applied  to  the  2)ctyment  of  tlie  co-partnership 
debts  pro-rata,  so  far  as  the  same  will  go.] 

Lastly.  The  said  party  of  the  second  part  shall  return  the 
surplus  of  the  said  net  proceeds  and  avails,  if  any  there  shall  be, 
to  the  party  of  the  first  part,  his  executors,  administrators,  or  as- 
signs. 

And  for  the  better  execution  of  these  presents,  and  of  the  trusts 


472  ^  APPENDIX. 

hereby  reposed,  the  said  party  of  the  first  part  hereby  makes,  con- 
stitutes and  appoints  the  party  of  the  second  part,  his  true  and 
lawful  attorney,  irrevocable,  with  full  power  and  authority  to  do 
and  transact  all  matters  and  things  necessary  in  the  premises,  as 
fully  and  completely  as  the  said  party  of  the  first  part  might  or  could 
do,  were  these  presents  not  executed,  and  attorneys,  one  or  more, 
under  him  to  make,  constitute,  and  appoint,  with  full  power  of  sub- 
stitution and  revocation,  hereby  ratifying  and  confirming  all  mat- 
ters and  things  whatsoever  that  my  said  attorney  shall  lawfully  do, 
or  cause  to  be  done,  in  the  premises. 

In  testimony  of  all  which,  the  party  of  the  first  part  has  here- 
unto set  his  hand  and  seal,  the  day  and  year  above  written. 

ELIHU  J.  GRANGER,  [l.  s.] 
Sealed  and  delivered  in 

presence  of 


AKBITEATIOK. 

4.  Form  of  Submission  to  Arhitration. 

Know  all  men  by  these  presents,  that  whereas  a  controversy  is 
now  existing  between  Henry  C.  Marvin,  of  ,  and  Her- 

bert B.  Turner,  of  ,  touching  an  alleged  indebtedness 

of  the  latter  to  the  former. 

Now,  therefore,  we  the  said  Henry  C.  Marvin  and  Herbert  B. 
Turner,  do  hereby  submit  the  said  controversy  to  the  decision  and 
arbitration  of  Isaac  Bronson,  John  T.  Pingree  and  John  B.  Ad- 
ams, all  of  ,  or  to  any  two  of  them  ;  and  do  cove- 
nant each  with  the  other,  that  we  will  in  all  things  faithfully  keep, 
observe,  and  abide  by,  the  decision  and  award  that  they,  or  any 
two  of  them,  may  make  in  writing,  in  the  premises,  under  their 
hands,  ready  to  be  delivered  on  or  before  the  first  day  of  January 
next. 

And  it  is  further  agreed  by  the  parties  hereto,  that  the  party 
that  shall  fail  to  keep,  abide  by,  and  observe  the  decision  and 
award  to  be  made  according  to  the  foregoing  submission,  shall  pay 
to  the  other  the  sum  of  three  hundred  dollars,  as  fixed  liquidated 
damages,  and  not  as  a  penalty. 


APPENDIX.  473 

Executed  mutually  by  the  parties  to  this  submission  this 

day  of  ,  one  thousand  eight  hundred  and  sLxty, 

IIEx\RY  C.  x^IARVIN,       [l.  s.] 

nERBERT  B.  TURNER,  [l.  s.] 
In  presence  of 

5.  Award  of  Arhitrat(yrs. 

To  all  whom  these  presents  may  concern,  We,  Isaac  Bronson, 
John  T.  Pingree,  and  John  B.  Adams,  to  whose  arbitration  and 
award  was  submitted  the  matters  in  controversy  existing  between 
Henry  C.  Marvin  and  Herbert  B.  Turner,  of  ,  as  ap- 

pears more  fully  by  their  written  submission  bearing  date  the 
day  of  ,  one  thousand  eight  hundred  and  sixty. 

Now,  therefore,  know  ye,  that  we  the  said  arbitrators,  having 
been  first  duly  sworn  according  to  law,  and  having  heard  the  proofs 
and  allegations  of  the  parties,  and  examined  the  matters  in  contro- 
versy by  them  submitted,  do  make,  publish  and  declare  this  our 
award  in  writing,  that  is  to  say,  we  find  that  Herbert  B.  Turner  is 
indebted  to  Henry  C.  Marvin  in  the  just  and  full  sum  of  one  hun- 
dred dollars,  and  we  direct  and  award  that  Herbert  B.  Turner, 
within  ten  days  after  service  upon  him  of  notice  of  this  award,  pay 
to  the  said  Henry  C.  Marvin  the  said  sum  of  one  hundred  dollars, 
together  with  the  costs  of  this  arbitration. 

In  witness  whereof  we  have  hereunto  subscribed  these  presents 
this  day  of  ,  A.  D.  18G0. 

ISAAC  BROXSOX,  [l.  s.] 
JOHN  T.  PIXGREE,[l.  s.] 
JOHN  B.  ADAMS,     [l.  s.] 

In  presence  of 

BILL  OF  EXCHANGE. 

6,  Form  of  one  of  a  set  of  Foreign  Bills  of  Exchange. 

No.  500. 

Exchange  for  $5,000. 

Alhanv,  Juhj  9,  1860, 

Twenty  days  after  sight  of  this  First  of  Exchange  (Second  and 

Third  unpaid),  pay  to  the  order  of  John  H.  Camp  five  thousand 


474:  APPENDIX. 

V 

dollars,  value  received,  and  charge  the  same  without  further  advice, 

to  account  of 

Your  ob't  serv't, 

DEAN  SAGE. 
To  Edwaed  M.  Greenly, 

London,  England. 

[  The  other  two,  that,  together  with  this,  compose  the  set,  are  in  t?ie 
same  form,  only  varying  the  numbers  first,  second,  and  third.'] 


v.  Foi^m  of  Inland  Bill  or  Draft. 

$500. 

Albany,  Aug.  1, 1860. 

Fifteen  days  after  sight,  pay  to  the  order  of  Alonzo  J.  Handley, 
five  hundred  dollars,  value  received,  and  charge  the  same  to  ac- 
count of 

Yours,  &c., 

THADDEUS  GRAVES, 

Albany,  N.  Y. 
To  Levi  Eobinson, 

Iowa  City,  Iowa. 


8.  Form  of  a  Clieck  on  a  Bank. 

Ho.  40. 

Albany,  Aug.  1, 1860. 
Mechanics'  &  Farmers'  Bank,  pay  to  M.  G.  Bright,  or  bearer, 
five  hundred  dollars. 

JESSE  BRIGHT. 


KOTES. 


9.  Form  of  Note  Negotiable  hy  Indorsement. 

$100. 

Albany,  Aug.  1,  1860. 
Three  months  after  date,  I  promise  to  pay  to  the  order  of  Na- 
thaniel Dean  one  hundred  dollars,  value  received. 

CHARLES  K.  LARD. 


APPENDIX.  475 

10.  Note  Negotiable  witlwut  Indorsement. 

eioo. 

Albaxt,  Ang.  1,  18C0. 
Three  months  after  date,  I  promise  to  pay  to  Theodore  C.  Sears, 
or  bearer,  one  hundred  dollars,  value  received. 

EDWARD  WADE. 

11.  Note  not  Negotialle. 
$500. 

Albaxv,  Aug.  1,  ISCO. 
Three  months  after  date,  I  promise  to  pay  Martin  I.  Townsend 

five  hundred  dollars,  value  received. 

GEORGE  WOLFORD. 

12.  Note  Payalle  at  a  Baal'. 
8300. 

Albaxt,  June  1,  1860. 

Three  months  after  date,  for  value  received,  I  promise  to  pay 

Elial  F.  Ilall,  or  order,  three  hundred  dollars  at  the  Mechanics'  <fe 

Farmers'  Bank,  Albany. 

THEODORE  BROWN. 


13.  Judgment  Note. 

For  value  received  I  promise  to  pay  to  Sidney  Ward,  or  order, 
the  sum  of  ,  thirty  days  after  date ;  and  I 

hereby  nominate,  constitute  and  appoint  the  said  Sidney  Ward,  or 
any  attorney  at  law  of  this  State,  my  true  and  lawful  attorney, 
irrevocable,  for  me  and  in  my  name  to  appear  at  any  court  of 
record  of  this  State,  at  any  time  after  the  above  promissory  note 
becomes  due,  and  to  waive  all  process  and  service  thereof,  and  to 
confess  judgment  in  favor  of  the  holder  hereof,  for  the  sum  that 
may  be  due  and  owing  hereon,  with  interest  and  costs,  and  waiv- 
ing all  errors,  &c. 

In  witness  whereof  I  have  hereimto  set  my  hand  and  seal,  at 
,  this  first  day  of 

ALEXANDER  J.  THOMPSON,  [l.  s.] 
Sealed  and  delivered  in 

presence  of 


476  APPENDIX. 

[The  oljeet  of  a  note  given  in  the  above  form,  is  to  enable  the  holder  to 
enter  zqy  judgment  thereon  ifnotp(dd  at  maturity.  This,  however,  can- 
not  he  done  in  Rew  Torh  or  in  any  of  the  Eastern  States.  It  is  done  in 
some  of  the  Western.] 


14.  Protest  for  Non-Fayment, 

United  States  of  America,  ) 
State  of  New  York,  \     ' 

Be  it  known  that  on  the  day  of  ,  in  the 

year  ,  at  the  request  of  the  Mechanics'  &  Farmers'  Bank,  I, 

Wm.  "W.  Frothingham,  a  Notary  Public,  duly  admitted  and  sworn, 
dwelling  in  the  city  of  Albany,  did  present  the  original  bill  or 
note  which  is  hereto  annexed,  and  demanded  payment  thereof, 
which  was  refused. 

I  therefore  on  the  same  day  and  year  above  written,  and  after 
said  demand  and  refusal,  duly  notified  the  Drawer  and  the  several 
indorsers  of  the  non-payment  of  the  same  as  follows  : 

By  serving  personally  on  at 

By  leaving  at  the  place  of  residence  of  at 

with 

By  putting  in  the  Post-office  in  this  city  notices  addressed  as 
follows ; 

One  for  ,  directed  to  ,  at 

each  of  the  above-named  places  being  the  reputed  place  of  resi- 
dence of  the  person  to  whom  the  notice  was  directed,  and  the  Post- 
office  nearest  thereto. 

Whereupon  I,  the  said  Notary,  at  the  request  aforesaid,  have 
Protested,  and  do  hereby  solemnly  Protest,  against  the  drawer 
and  indorsers  of  the  said  and  all  others  con- 

cerned, for  all  Exchange,  Ke-Exchange,  costs,  damages  and  interest 
incurred,  or  to  be  incurred,  by  reason  of  the  non-payment  of  the  said 

In  witness  whereof,  I  have  hereunto  subscribed  my  name,  and 
affixed  my  seal  of  office. 

WM.  W.  FROTHINGHAM,  Notary  PubHc. 


APPEiroix.  477 

15.  Notice  to  a  Dravjer  or  Indorser. 
Sir: 

Take  notice,  That  a  for 

dollars,  indorsed  by  you,  was  this  day  Protested  for  non-payment, 
and  that  the  holder  looks  to  you  for  the  payment  thereof,  payment 
of  the  same  having  this  day  been  demanded  and  refused. 

Kespectfully  yours,  &c., 
$  W.  W.  FROTniNGHA^I,  Notary  PubUc. 


16.  Letter  of  Credit 

Albany,  June  20, 1860. 
Messrs.  Opdtke  &  Ackeeman  : 

Gentlemen : — Please  deliver  to  Sidney  L.  Harris,  of  this  place, 

goods,  wares   and  merchandise,  such  as  he   may  select,  to  any 

amount  not  exceeding  altogether  the  sum  of  one  thousand  dollars, 

and  I  will  become  responsible  to  you  for  the  payment  of  the  same, 

in  case  Mr.  Harris  should  fail  to  make  payment  therefor. 

You  will  please  to  notify  me  of  the  amount  for  which  you  may 

give  him  credit,  and  if  default  should  be  made  in  the  payment,  let 

me  know  it  immediately. 

I  am,  gentlemen,  your  most  ob't  serv't, 

SAilTEL  D.  COZZENS. 

To  Opdyke  «fc  Ackeeman, 

No.        Nassau  street,  New  York. 


17.  Lease. 

This  Indenture  of  Lease  made  the  first  day  of  April,  18C0,  be- 
tween C.  B.  Skinner,  of  ,  of  the  first  part,  and  W. 
S.  Hevenor,  of                             ,  of  the  second  part : 

Witnesseth,  That  the  said  party  of  the  first  part,  hereby  doth 
grant,  demise  and  to  farm  let,  unto  the  said  party  of  the  second 
part,  all  that  [Jiere  describe  the  j^i'C'niiscs]  with  the  appurtenances, 
for  the  term  of  five  years  from  the  first  day  of  May,  18G0,  at  the 
yearly  rent  or  sum  of  one  hundred  dollars,  to  be  paid  in  equal 
quarter-yearly  payments.  And  it  is  agreed  that  if  any  rent  shall 
be  due  and  unpaid,  or  if  default  shall  be  made  in  any  of  the  cov- 


478  APPENDIX. 

enants  herein  contained,  then  it  shall  be  lawful  for  the  said  party 
of  the  first  part  to  re-enter  the  said  premises,  and  to  remove  all 
persons  therefrom. 

And  the  said  party  of  the  second  part  doth  covenant  to  pay  to 
the  said  party  of  the  first  part,  the  said  yearly  rent  as  herein  speci- 
fied, namely,  in  quarter-yearly  payments,  on  the  first  day  of  Au- 
gust, November,  February,  and  May,  in  each  and  every  year  ;  and 
that  at  the  expiration  of  said  term,  the  said  party  of  the  second 
part  vrill  quit  and  surrender  the  premises  hereby  demised,  in  as 
good  state  and  condition  as  reasonable  use  and  wear  thereof  will 
permit,  damages  by  the  elements  excepted  ;  and  the  said  party  of 
the  first  part  doth  covenant,  that  the  said  party  of  the  second  part, 
on  paying  the  said  yearly  rent,  and  performing  the  covenants  afore- 
said, shall  and  may  peaceably  and  quietly  have,  hold,  and  enjoy, 
the  said  demised  premises  for  the  term  aforesaid. 

In  witness  whereof  we  have  hereunto  set  our  hands  and  seals 
this  first  day  of  April,  1860. 

C.  B.  SKINNER,    [l.  s.] 
W.  S.  HEVENOR,  [l.  s.] 
Sealed  and  delivered  in 

presence  of 

18.  Common  Money  Bond. 

Know  all  men  by  these  presents,  that  I,  W.  H.  Green,  of 

,  am  held  and  firmly  bound  unto  G.  S.  Tuckerman, 
of  ,  in  the  sum  of  one  hundred  dollars  lawful 

money  of  the  United  States,  to  be  paid  to  the  said  G.  S.  Tucker- 
man, his  personal  representatives  or  assigns,  for  which  payment 
well  and  truly  to  be  made,  I  bind  myself,  my  heirs,  executors  and 
administrators,  and  each  of  them  firmly  by  these  presents.  Sealed 
with  my  seal.  Dated  the  first  day  of  May,  one  thousand  eight 
hundred  and  sixty. 

The  condition  of  the  above  obligation  is  such,  that  if  the  above 
bounden  W.  H.  Green,  or  his  heirs,  or  personal  representatives, 
shall  well  and  truly  pay,  or  cause  to  be  paid,  unto  the  above-named 
G.  S.  Tuckerman,  his  personal  representatives,  or  assigns,  the  just 
and  full  sum  of  fifty  dollars,  on  the  first  day  of  October  next,  then 


APPENDIX.'  479 

the  above  obligation  to  be  void,  otherwise  to  remain  in  full  force 
and  virtue. 

W.  n.  GREEN,  [l.  s.] 
Sealed  and  delivered  in  presence  of 


19.  Bond  of  Indemnity. 

[Same  as  preceding  down  to  the  Condition.] 

Wbereas  tbe  above  bounden  W.  H.  Green  and  G.  S.  Tucker- 
man  did  obtain  judgment  in  tlie  Supreme  Court  against  W.  S. 
Hevenor  for  two  hundred  dollars,  damages  and  costs,  whereupon 
execution  has  been  issued,  directed  and  delivered  to  Alfred  Ed- 
wards, commanding  him,  that  of  the  goods  and  chattels  of  the  said 
W.  S.  Hevenor,  he  should  cause  to  be  made  the  damages  and  costs 
aforesaid ;  and  whereas  certain  goods  and  chattels  that  appear  to 
belong  to  the  said  W,  S.  Hevenor  are  claimed  by  Wm.  F.  Jones, 
of 

Now  therefore  the  condition  of  this  obligation  is  such,  that  if 
the  above  bounden  W.  H.  Green  and  G.  S.  Tuckerman  shall  well 
and  truly  save,  keep,  and  bear  harmless,  and  indemnify  the  said 
Alfred  Edwards,  and  all  and  every  person  and  persons  aiding  and 
assisting  him  in  the  premises,  of  and  from  all  harm,  damages,  costs, 
suits,  actions,  judgments  and  executions,  that  shall  or  may,  at 
any  time,  arise,  come,  or  be  brought  against  him,  them  or  any  of 
them,  as  well  for  the  levying  and  making  sale  under  and  by  virtue 
of  such  execution,  of  all  or  any  goods  or  chattels  which  he  or  they 
shall  or  may  judge  to  belong  to  the  said  "W.  S.  Hevenor,  as  well  as 
in  entering  any  shop,  store,  building  or  other  premises,  for  the 
taking  of  any  such  goods  and  chattels ;  then  this  obligation  to  bo 
void,  else  to  remain  in  full  force  and  virtue. 

W.  n.  GREEN,  [l.  s.] 

G.  S.  TUCKERMAN,  [l.  s.] 
Sealed  and  delivered  in 

presence  of 

20.  Bottomry  Bond, 
Know  all  men  by  these  presents,  that  I,  John  C.  McClnre,  now 
master  and  commander  of  the  vessel  called  the  Artemissa,  of  the 


480  APPENDIX. 

burden  of  about  five  hundred  tons,  now  lying  at  the  port  of  New 
Orleans,  am  held  and  firmly  bound  vmto  Willard  J.  Gambell,  of 
,  in  the  sum  of  four  thousand  dollars,  lawfid 
money  of  the  United  States,  to  be  paid  to  the  said  Willard  J. 
Gambell,  or  to  his  certain  Attorney,  personal  representatives,  or  as- 
signs, for  which  payment  well  and  truly  to  be  made,  I  bind  myself, 
my  heirs  and  personal  representatives,  and  also  the  said  vessel,  her 
tackle,  apparel,  and  furniture,  firmly  by  these  presents. 

Sealed  with  my  seal  at  ,  this  day 

of  ,  one  thousand 

Whereas  the  above  bounden  John  C.  McClure  has  been  obliged 
to  take  up  and  borrow,  and  has  received  of  the  said  Willard  J. 
Gambell,  for  the  use  of  the  said  vessel,  and  for  the  purpose  of  fit- 
ting the  same  for  sea,  the  sum  of  two  thousand  dollars,  lawful 
money  of  the  United  States,  which  sum  is  to  be,  and  remain,  as  a 
lien  and  bottomry  on  the  said  vessel,  her  tackle,  apparel  and  fur- 
niture, at  the  rate  or  premium  of  thirty  per  cent,  for  the  voyage ; 
in  consideration  whereof  all  risks  of  the  seas,  rivers,  enemies,  fires, 
pirates,  &c.,  are  to  be  on  account  of  the  said  Willard  J.  Gambell. 
And  for  the  better  security  of  the  said  sum  and  premium,  the  said 
master  doth,  by  these  presents,  hypothecate  and  assign  over  to  the 
said  Willard  J.  Gambell,  his  heirs,  personal  representatives  and 
assigns,  the  said  vessel,  her  tackle,  apparel,  and  furniture.  And  it 
is  hereby  declared  that  the  said  vessel  Artemissa,  is  thus  hypothe- 
cated and  assigned  over  for  the  security  of  the  money  so  borrowed, 
and  taken  up  as  aforesaid,  and  shall  be  delivered  for  no  other  use 
or  purpose  whatever,  until  this  bond  is  first  paid,  together  with  the 
premium  hereby  agreed  to  be  paid  thereon. 

Now,  the  condition  of  this  obligation  is  such,  that  if  the  above 
bounden  John  C.  McClure  shall  well  and  truly  pay  or  cause  to  be 
paid  imto  the  said  Willard  J.  Gambell,  his  certain  Attorney,  per- 
sonal representatives  and  assigns,  the  just  and  fall  sum  of  two 
thousand  dollars,  lawful  money  as  aforesaid,  being  the  sum  bor- 
rowed, and  also  the  premium  aforesaid,  at  or  before  the  expiration 
of  ten  days  after  the  arrival  of  the  said  vessel  at  the  port  of  New 
York,  then  this  obligation  and  the  said  hypothecation  to  be  void 
and  of  no  eflfect,  otherwise  to  remain  in  full  force  and  virtue. 

JOHN  C.  McCLURE,  [l.  $.] 

Sealed  and  delivered  in  presence  of 


ATPENDIX.  481 

21.  Bill  of  SaU. 

Know  all  men  by  tlicsc  presents,  that  I  John  Baldwin,  of 

,  party  of  the  first  part,  for  and  in  consideration  of  the 
sum  of  two  hundred  dollars,  lawful  money  of  the  United  States, 
to  me  in  hand  paid,  at  or  before  the  ensealing  and  delivery  of 
these  presents,  by  J,  H.  Ackerman,  of  the  same  place,  of  the  sec- 
ond part,  the  receipt  whereof  is  hereby  acknowledged,  have  bar- 
gained and  sold,  and  by  these  presents  do  grant  and  convey,  unto 
the  said  party  of  the  second  part,  his  personal  representatives  and 
assigns,  the  following  articles  of  personal  property,  viz.,  [//err 
specify  subject-matter  of  the  sale\  to  have  and  to  hold  the  same 
unto  the  said  party  of  the  second  part,  his  personal  representatives 
and  assigns  for  ever. 

And  I  do  for  myself,  my  heirs,  and  personal  representatives, 
covenant  and  agree  to,  and  with,  the  said  party  of  the  second  part, 
to  warrant  and  defend  the  sale  of  the  said  goods  and  chattels,  here- 
by sold  unto  the  said  party  of  the  second  part,  his  personal  repre- 
sentatives and  assigns,  against  all  and  every  person  and  persons 
whomsoever. 

[And  if  to  the  ordinary  bill  of  sale  be  added  a  covenant  of  warranty,  as  of  a 
horse,  add^ 

And  I  do  hereby  warrant  the  said  horse  to  be  sound  in  every 
respect,  to  be  free  from  vice,  to  be  well  broken,  and  kind  and  gen- 
tle in  single  and  in  double  harness,  and  under  the  saddle ;  and  I 
covenant  for  myself,  my  heirs  and  personal  representatives,  with  the 
said  J.  II.  Ackerman,  to  warrant  and  defend  the  sale  of  the  said 
horse  imto  the  said  J.  H.  Ackerman,  his  personal  representatives 
and  assigns,  against  all  and  every  person  and  persons,  lawfully 
claiming  or  to  claim  the  same,  whomsoever. 

In  witness  whereof  I  have  hereunto  set  my  hand  and  seal,  this 
day  of  ,  one  thousand  cij^ht  hundred  and  sixty. 

JOHN  BALDAVIN,  [l.  s.] 
Sealed  and  delivered  in 

presence  of 

31 


482  APPENDIX. 

22.  Deed  of  Gompromise  with  Creditors. 

Know  all  men  by  these  presents,  that  whereas  Moses  Adams  is 
justly  indebted  unto  us,  Dan  Ketchum,  Ernest  J.  Miller,  and 
James  M.  Eipley,  creditors  of  the  said  Moses  Adams,  in  divers 
sums  of  money,  which  he  was  become  imable  fully  to  pay  and  dis- 
charge ;  therefore  we,  the  said  creditors,  do  consent  and  agree  with 
the  said  Moses  Adams  to  demand  and  receive  less  than  the  full 
amount  of  our  respective  claims,  and  to  accept  of  fifty  cents  for 
every  dollar  owing  to  each  of  us  the  said  creditors  of  the  said  Moses 
Adams,  in  full  satisfaction  and  discharge  of  our  several  claims  and 
demands  ;  the  said  sum  of  fifty  cents  on  the  dollar  to  be  paid  to 
each  of  us,  our  heirs  and  personal  representatives,  within  the  space 
of  ten  months  from  the  date  thereof.  And  we  the  creditors  afore- 
said, do  further  severally  and  respectively  covenant  and  agree  with 
the  said  Moses  Adams,  that  he  may,  within  the  said  time  of  ten 
months  from  this  date,  sell  and  dispose  of  his  goods  and  chattels  and 
all  his  efiects,  for  the  payment  of  the  fifty  cents  on  the  doUar  of 
each  of  our  respective  debts,  and  that  neither  of  us  wlU,  at  any  time 
hereafter,  commence  any  proceedings  either  at  law  or  equity  against 
the  said  Moses  Adams  for  any  debt  now  due  and  owing  to  us,  or 
any  of  us,  provided  the  said  Moses  Adams  does  within  the  time 
before  limited,  well  and  truly  pay,  or  cause  to  be  paid,  the  said  fifty 
cents  for  every  dollar  of  each  of  our  several  and  respective  claims 
against  him. 

In  witness  whereof  we  have  hereimto  set  our  hands  and  seals, 
this  day  of  ,  in  the  year 

DAN  KETCHUM,  [l.  s.] 
And  the  other  creditors. 
Signed,  sealed  and  delivered  in 

presence  of 

CONTEACTS. 

23.  General  form  of  Contrcict  loliere  tliere  are  mutual 
Covenants. 
This  contract  entered  into  this  day  of  ,  between 

Edward  Van  Ness,  of  ,  of  the  first  part,  and  Harlo 


APPENDIX.  483 

Hakes,  of  ,  of  the  second  part,  TTitnessetb, 

that  the  said  Edward  Van  Ness,  in  consideration  of  the  covenants 
on  the  part  of  the  party  of  the  second  i)art  hereinafter  contained, 
doth  covenant  and  agree  to,  and  with  the  said  Harlo  Hakes,  that 
{here  insert  what  the  said  Edward  Van  Ness  is  to  perform). 

And  the  said  Harlo  Hakes,  in  consideration  of  the  covenants  on 
the  part  of  the  party  of  the  first  part,  doth  covenant  and  agree  to, 
and  with  the  said  Edward  Vtin  Ness,  that  [here  insert  tvhat  the  said 
Harlo  Hakes  is  to  pay  or  do). 

In  testimony  whereof,  we  have  hereunto  set  our  hands  and  seals 
the  day  and  year  first  above  written. 

EDWARD  VAX  NESS,  [l.  s.J 
nARLO  mVKES,  [l.  s.] 

Sealed  and  delivered  in 

presence  of 

24.   Contract  for  Sale  of  Shares  of  Stock. 

This  agreement  entered  into  this  day  of  ,  in  the 

year  ,  between  Caleb  D.  Randall, 

of  ,  of  the  first  part,  and  Eedman  D.  Stephens,  of 

,  of  the  second  part, 

Witnesseth,  that  in  consideration  of  the  agreement  of  Redman 
D.  Stephens  hereinafter  contained,  the  said  Caleb  D.  Randall  agrees 
to  sell,  transfer,  and  convey,  to  the  said  Redman  D.  Stephens,  on 
the  fifth  day  of  July  next,  and  upon  payment  of  the  money  herein- 
after stated,  five  hundred  shares  of  stock  of  the  Mechanics'  and 
Farmers'  Bank,  now  OA\Tied  by  the  said  Caleb  D.  Randall,  and 
standing  in  his  name  on  the  books  of  the  said  bank,  and  to  execute 
and  deliver  to  the  said  Redman  D.  Stephens,  all  necessary  assign- 
ments, transfers,  and  conveyances,  to  assure  and  convey  the  same 
to  the  said  Redman  D.  Stephens,  his  personal  representatives  and 
assigns  forever. 

In  consideration  of  which  the  said  Redman  D.  Stephens  agrees 
with  the  said  Caleb  D.  Randall,  to  pay  to  him  one  hundred  dollars 
for  each  share  of  the  said  capital  stock  on  the  said  fifth  day  of  July 
next^ 


484  APPENDIX. 

In  witness  whereof,  we  have  hereunto  set  our  hands  and  seals 
the  day  and  year  above  written. 

CALEB  D.  RANDALL,        [l.  s.] 
REDMAN  D.  STEPHENS,  [l.  s.] 

In  presence  of 

25.  Contract  for  the  sale  of  Land. 

Articles  of  agreement  made  this  first  day  of  May,  one  thousand 
eight  hundred  and  sixty,  between  Eichard  M.  Strong,  of 
of  the  first  part,  and  Hiram  Scofield,  of  ,  of  the 

second  part,  witnesseth,  that  the  said  party  of  the  first  part,  for 
and  in  consideration  of  the  sum  of  one  hundred  dollars,  to  him  in 
hand  paid,  by  the  said  party  of  the  second  part,  has  contracted  and 
agreed,  and  does  hereby  contract  and  agree  to  sell  to  the  said  party 
of  the  second  part,  all  that  certain  piece  or  parcel  of  land,  situate 
in  the  town  of  Bethlehem  in  Albany  county  and  State  of  New  York, 
and  which  is  bounded  and  described  as  follows,  viz.,  beginning  at 

{here  insert  description  of  land). 

And  the  said  party  of  the  first  part  agrees  on  the  first  day  of 
May  next,  to  execute  and  deliver  to  the  said  party  of  the  second  part,  a 
deed  with  the  common  covenants  of  warranty,  and  properly  ac- 
knowledged so  that  it  can  be  recorded,  conveying  said  land  to  the 
party  of  the  second  part,  his  heirs  and  assigns.  And  said  party  of 
the  second  part,  covenants  and  agrees  with  the  said  party  of  the 
first  part,  that  contemporaneously  with  the  deHvery  of  said  deed, 
and  as  the  consideration  therefor,  and  as  part  and  parcel  of  the 
same  transaction,  he  will  pay  to  said  party  of  the  second  part,  the 
sum  of  five  hundred  dollars  as  part  of  the  purchase  money  thereof, 
and  that  he  will  also  at  the  same  time,  and  as  a  part  of  the  same 
transaction,  execute  and  deliver  to  said  party  of  the  first  part  a 
bond  conditioned  to  pay  two  thousand  dollars,  the  balance  of  the 
purchase-money,  in  two  equal  annual  instalments  with  interest  from 
date,  and  also  in  like  manner  to  execute  and  deliver  as  security  for 
the  payment  of  said  bond,  a  mortgage  in  the  common  form,  on  said 
premises,  which  shall  contain  a  power  of  sale,  and  be  so  acknowl- 
edged that  it  can  be  recorded. 

And  it  is  further  agreed  that  if  default  be  made  in  fulfilling  this 


APPENDIX.  485 

contract,  or  any  part  thereof  on  the  part  of  the  party  of  the  second 
part,  then  the  party  of  the  first  part  shall  be  at  liberty  to  consider 
this  contract  at  an  end,  and  to  dispose  of  the  said  laud  to  any  other 
person,  in  the  same  manner  as  if  this  contract  had  never  been 
made.  And  each  party  in  case  of  refusal  to  perform,  hereby  agrees 
to  pay  to  the  other,  as  and  for  liquidated  damages,  and  not  as  a 
penalty,  the  sum  of  five  hundred  dollars. 

In  witness  whereof  Executed 

under  seal  by  both  parties. 

RICHARD  M.  STRONG,  [l.  s.J 
HIRAM  SCOFIELD,  [l.  s.] 

In  presence  of 


DEEDS. 

26.  Quit  Claim  ivitli  Covenants  against  Grantors' 

Acts. 

This  Indenture,  made  the  day  of  ,  in  the  year 

,  between  Comelieus  Esseltyne, 
of  ,  and  Jane  his  wife,  parties  of  the  first  part, 

and  Herman  V.  Esseltyne,  of  .         ,  party  of  the  second 

part,  "Witnesseth,  that  the  said  parties  of  the  first  part,  for  and  in 
consideration  of  the  sum  of  one  thousand  dollars  lawful  money  of 
the  United  States,  to  them  in  hand  paid  by  the  said  party  of  the 
second  part,  at  and  before  the  ensealing  and  delivery  of  these 
presents,  the  receipt  whereof  is  hereby  acknowledged,  have  remised, 
released  and  quit  claimed,  and  by  these  presents  do  remise,  release, 
and  quit  claim  unto  the  said  party  of  the  second  part,  and  to  his 
heirs  and  assigns  forever,  all  that  certain  piece  and  parcel  of  land, 
situate,  lying  and  being  in  the  town  of 

(liere  describe  the  land),  together  with  all  and  singular  the  tene- 
ments, hereditaments,  and  appurtenances,  thereunto  belonging  or  in 
any  wise  appertaining,  and  the  reversion  and  reversions,  remainder 
and  remainders,  rents,  issues,  and  profits  thereof;  and  also  all  the 
estate,  right,  title,  interest,  dower  and  right  of  dower  property, 
possession,  claims  and  demands  whatsoever,  as  well  in  law  as  in 
equity,  of  the  said  parties  of  the  first  part,  of,  in  or  to  the  abovo 


486  APPENDIX. 

described  premises,  and  every  part  and  parcel  thereof,  ^-itli  the  appur- 
tenances. To  have  and  to  hold  all  and  singular  the  above  men- 
tioned and  described  premises,  together  -with  the  appurtenances, 
unto  the  said  party  of  the  second  part,  his  heirs  and  assigns  forever. 
And  the  parties  of  the  first  part  hereby  covenant  with  the  party  of 
the  second  part  that  they,  nor  either  of  them,  have  or  has  done  or 
omitted  to  do  any  act  or  thing  whereby,  or  by  means  of  which,  the 
title  to  said  premises  is,  or  may  become  destroyed,  or  in  any  degree 
injured  or  impaired. 

In  witness  whereof  the  parties  have  hereunto  set  their  hands 
and  seals  the  day  and  year  above  written. 

CORNELIUS  ESSELTYNE,  [l.  s.] 
J^NE  ESSELTYNE.  [l.  s.] 

In  presence  of 

27.  Deed  with  Covenants  of  Warranty. 

This  Indenture,  made  this  day  of  ,  in  the  year 

,  between  John  Sanderson,  of 
,  and  Elizabeth  his  wife,  parties  of  the  first  part, 
and  Charles  C  Givens,  of  ,  party  of  the  second  part, 

Witnesseth,  that  the  said  parties  of  the  first  part,  for  and  in  con- 
sideration of  the  sum  of  five  thousand  dollars,  lawful  money  of  the 
United  States,  to  them  duly  paid  before  the  delivery  hereof,  have 
bargained  and  sold,  and  by  these  presents,  do  grant  and  convey  to 
the  said  party  of  the  second  part,  his  heirs  and  assigns  forever,  all 
that  certain  piece  or  parcel  of  land,  situate,  lying,  and  being  in  the 
town  of  and  which  is  known  and  described  as  follows 

{here  describe  the  premises  intended  to  be  conveyed),  together  with  all 
and  singular  the  tenements,  hereditaments  and  appurtenances 
thereunto  belonging,  and  all  the  estate,  title,  and  interest,  dower 
and  right  of  dower,  of  the  said  parties  of  the  first  part,  or  either  of 
them  therein. 

And  the  said  John  Sanderson  for  himself,  his  heirs  and  personal 
representatives,  doth  covenant,  grant  and  agree  to,  and  with  the 
said  party  of  the  second  part,  his  heirs  and  assigns,  that  at  the 
time  of  the  delivery  hereof,  he  is  the  lawful  owner  of  the  premises 
above  granted,  and  seized  thereof  in  fee  simple  absolute,  and  that 


APPENDIX.  4S7 

he  will  warrant  and  forever  defend  tlie  above  granted  premises  in 
tlie  quiet  and  peaceable  possession  of  the  said  party  of  the  second 
part,  against  any  and  all  persons  whomsoever  lawfully  claiming  the 
same. 

In  witness  whereof  {in  the  usual  form). 

JOHN  SANDERSON.  [l.  s.] 

ELIZABETU  SANDERSON,   [l.  s.] 
In  presence  of 


28.  Deed  with  Full  Covenants  of  Warranty. 

This  indenture  made  the  day  of  , 

in  the  year  one  thousand  eight  hundred  and  ,  between 

Andrew  Anderson,  jr.,  and  Eoxana  his  wife,  of  , 

of  the  first  part,  and  Charles  C.  Bates,  of  , 

of  the  second  part,  Witnesseth,  that  the  said  parties  of  the  first 
part,  for  and  in  consideration  of  the  sum  of 

dollars  lawful  money  of  the  United  States,  to  them  in  hand  paid  by 
the  said  party  of  the  second  part,  at  or  before  the  ensealing  and 
delivery  of  these  presents,  the  receipt  whereof  is  hereby  acknowl- 
edged, have  granted,  bargained,  sold,  aliened,  remised,  released, 
conveyed,  and  confirmed,  and  by  these  presents  do  grant,  bargaiu 
and  sell  unto  the  said  party  of  the  second  part.  Ids  heirs  and 
assigns  forever  all  (here  describe  the  jjrcviises  intended  to  he  con' 
veyed)  together  with  all  and  singular  the  tenements,  hereditaments 
and  appurtenances,  thereunto  belonging,  or  in  any  wise  appertain- 
ing, and  the  reversion  and  reversions,  remainder  and  remainders, 
rents,  issues,  and  profits  thereof  And  also  all  the  estate,  right, 
title,  interest,  dower  and  right  of  dower,  property  possession,  claim 
and  demand,  Avhatsoevcr,  as  well  in  law  as  m  equity,  of  the  said 
parties  of  the  first  part,  of  in  or  to,  the  above  described  premises, 
and  every  part  and  parcel  thereof,  with  the  appurtenances.  To 
have  and  to  hold  tlic  same  unto  the  said  party  of  the  second  part, 
his  heirs  and  assigns  forever. 

And  the  said  Andrew  Anderson,  jr.,  for  himself  his  heirs  and 
personal  representatives,  doth  covenant,  grant  and  agree  to,  and 
with  the  said  party  of  the  second  part,  liis  heirs  and  assigns,  that 


488  APPENDIX. 

the  said  Andrew  Anderson,  jr.,  at  the  time  of  the  sealing-  and 
delivery  of  these  presents,  is  lawfully  seized  in  his  own  right  {if 
such  he  the  fact)  of  a  good,  absolute  and  indefeasible  estate  of  in- 
heritance, in  fee  simple,  of  and  in,  all  and  singular  the  above 
granted  and  described  premises,  with  the  appurtenances,  and  hath 
good  right,  full  power,  and  lawful  authority,  to  grant,  bargain,  sell 
and  convey  the  same,  in  manner  aforesaid  ;  and  that  the  said  party 
of  the  second  part,  his  heirs  and  assigns,  shall  and  may,  at  all 
times  hereafter,  peaceably  and  quietly  have,  hold,  use,  occupy, 
possess  and  enjoy,  the  above  granted  premises,  and  every  part  and 
parcel  thereof,  with  the  appurtenances,  without  any  let,  suit,  trouble, 
molestationj  eviction,  or  disturbance,  of  the  said  parties  of  the  first 
part,  their,  or  either  of  their  heirs  or  assigns,  or  of  any  other  person  or 
persons  lawfully  claiming  or  to  claim  the  same  ;  and  that  the  same 
now  are  free,  clear,  discharged,  and  unincumbered,  of  and  from  all 
former  and  other  grants,  titles,  charges,  estates,  judgments,  taxes,  as- 
signments, and  incumbrances,  of  what  nature  or  kind  soever.  And 
also  that  the  said  parties  of  the  first  part,  and  their  heirs,  and  the 
heirs  of  each  of  them,  and  all  and  every  person  or  persons  whom- 
soever, lawfully  or  equitably  deriving  any  estate,  right,  title,  or  in- 
terest, of,  in,  or  to,  the  herein-granted  premises,  by,  from,  under,  or 
in  trust  for,  him  or  them,  shall  and  will,  at  all  time  or  times,  here- 
after, upon  the  reasonable  request,  and  at  the  proper  costs  and 
charges  in  the  law  of  the  said  party  of  the  second  part,  his  heirs 
and  assigns,  make,  do  and  execute,  or  cause  to  be  made,  done,  and 
executed,  all  and  every  such  further  and  other  lawful  and  reason- 
able acts,  conveyances  and  assurances,  in  the  law,  for  the  better  and 
more  efiectually  vesting  and  confirming  the  premises  hereby  granted, 
or  so  in^nded  to  be,  in  and  to  the  said  party  of  the  second  part, 
his  heirs  and  assigns  forever,  as  by  the  said  party  of  the  second 
part,  his  heirs  or  assigns,  or  his  or  their  coimsel,  shall  be  reasonably 
advised,  devised  or  required.  And  the  said  Andrew  Anderson,  jr., 
for  himself  and  his  heirs,  the  above  described,  and  hereby  granted 
and  released  premises,  and  every  part  and  parcel  thereof,  with 
the  appurtenances,  unto  the  said  party  of  the  second  part,  his  heirs 
and  assigns,  against  the  said  parties  of  the  first  part,  their  or  either 
af  their  heirs,  and  against  all  and  every  person  and  persons  whom- 


APPENDIX.  489 

soever,  lawfully  claiming,  or  to  claim  the  same,  shall  and  will  war- 
rant, and  by  these  presents  forever  defend. 

In  witness  whereof,  the  said  parties  of  the  first  part  have  here- 
unto set  their  hands  and  seals  the  day  and  year  first  above 
written. 

ANDREW  ANDERSON,  Jr..  [l.  6.] 
ROXANA  ANDERSON,  [l.  s.] 

In  presence  of 


29.  Trmt  Deed. 

This  Indenture  made  this  day  of 

between  Edward  V.  R.  Evans,  of  , 

of  the  first  part,  and  Elbert  0.  Hand  of  the  same  place,  of  the 
second  part. 

Whereas  the  said  Edward  V.  E.  Evans  is  desirous  of  making 
provision  for  his  daughter  Florilla  Evans  now  of  the  age  of  thirteen 
years,  against  future  contingencies,  and  for  her  maintenance  and 
support ;  and  whereas  the  said  Edward  V.  K.  Evans  is  desirous  that 
his  said  daughter  should  enjoy  the  proceeds,  rents,  issues,  and 
income,  of  the  real  estate  hereinafter  more  particularly  described, 
during  the  term  of  her  natural  life,  free  from  the  control,  liabilities, 
or  interference  of  any  husband  she  may  hereafter  have. 

Now,  therefore,  this  indenture  witnesseth,  that  the  said  Edward 
V.  E.  Evans  in  consideration  of  the  premises,  and  of  the  sum  of 
one  dollar  lawful  money  of  the  United  States,  to  hira  in  hand  paid 
by  the  said  party  of  the  second  part,  the  receipt  whereof  is  hereby 
acknowledged,  hath  bargained,  sold,  aliened,  remised,  released,  con- 
veyed, and  confirmed,  and  by  these  presents  doth  bargain,  sell, 
alien,  remise,  release,  convey,  and  confirm,  unto  the  said  party  of 
the  second  part,  all  that  certain  lot,  piece,  or  parcel  of  laud,  situate, 
lying,  and  being  in  the  town  of  bounded  and  dcscrilxnl  as  fol- 

lows :  {here  insert  description  of  the  premises)  together  with  all  and 
singular  the  tenements,  hereditaments,  and  appurtenances,  there- 
unto belonging  or  in  any  wise  appertaining ;  and  the  reversion  and 
reversions,  remainder  and  remainders,  rents,  issues,  and  prolits 
thereof;   and  also  aU  the  estate,  right,  title,  interest,  'property. 


490  APPENDIX. 

possession,  claim,  and  demand  whatsoever,  as  well  at  law  as  in 
equity,  of  the  said  party  of  the  first  part,  of,  in,  or  to  the  above 
described  premises,  and  every  part  and  parcel  thereof,  with  the 
appurtenances. 

To  have  and  to  hold  all  and  singular  the  above-mentioned  and 
described  premises,  together  with  the  appurtenances,  unto  the  said 
Elbert  0.  Hand,  his  successors  and  assigns. 

In  trust  and  upon  the  uses,  trusts,  and  purposes,  hereinafter 
mentioned,  viz., 

First.  To  lease  the  same,  and  to  take,  collect,  and  receive  the 
rents,  issues  and  profits  thereof ;  and  out  of  the  same  to  keep  the 
said  premises  in  good  order  and  repair,  and  properly  insured,  and 
pay  all  taxes,  assessments,  and  charges,  that  may  be  imposed 
thereon. 

Second.  To  pay  the  residue  of  such  rents,  issues,  and  income, 
to  my  daughter,  Florilla  Evans,  upon  her  sole  and  separate  receipt, 
to  the  intent  and  purpose  that  she  may  enjoy,  possess,  and  have 
the  same,  free  from  the  control,  interference,  or  liabilities,  of  any 
husband  she  may  hereafter  have,  during  the  term  of  her  natural  life. 

Third.  To  convey  the  said  land  and  premises  to  such  person 
or  persons  as  she,  the  said  Florilla  Evans,  by  her  last  will  and 
testament,  or  by  an  instrument  in  the  nature  of  a  last  will  and 
testament,  subscribed  by  her  in  the  presence  of  two  credible  wit- 
nesses, notwithstanding  her  coverture,  may  direct  and  appoint. 

And  the  said  Edward  V.  E.  Evans  hereby  declares,  that  upon 
the  decease  of  his  said  daughter,  Florilla  Evans,  the  said  trusts, 
hereby  created,  shall  cease  and  determine,  and  the  land  and  prem- 
ises above  described,  shall  belong,  in  fee  simple  absolute,  to  such 
person  or  persons  as  the  said  Florilla  Evans  shall,  as  aforesaid, 
direct  and  appoint ;  and  in  default  of  such  appointment,  shall 
revert  to  the  said  Edward  V.  E.  Evans,  the  grantor  herein  named, 
and  to  his  heirs,  to  his  and  their  sole  use,  benefit,  and  behoof 
forever. 

And  the  said  party  of  the  second  part  doth  hereby  signify  his 
acceptance  of  this  trust,  and  doth  hereby  covenant  and  agree,  to 
and  with  the  said  party  of  the  first  part,  faithfully  to  discharge  and 
execute  the  same  acccording  to  the  true  intent  and  meaning  of  these 
presents. 


APPENDIX.  491 

In  witness  whereof,  the  parties  have  hereunto  set  their  hands 
and  seab,  the  day  and  year  first  above  written. 

EDWARD  V.  R.  EVANS,  [l.  s.] 
ELBERT  0.  UAN'D,  [l.  b.] 

In  presence  of 


30.  Deed  of  a  Water  Course. 

This  Indenture  made 

between  George  L.  Stedman  of 
of  the  first  part,  and  Sam  Vanton  of  , 

of  the  second  part.  Whereas,  the  said  parties,  at  the  time  of  the 
sealing  and  delivery  of  these  presents  are  respectively  seized  in  fee, 
of  and  in  two  contiguous  tracts,  pieces  or  parcels,  of  land,  with  the 
appurtenances,  in  the  town  of  , 

and  whereas  there  is  a  dam  and  race,  or  water  course,  erected  and 
made  in  and  upon  a  certain  stream  of  water,  known  as 

,  within  the  land  of  the  said  party  of  the  first  part, 
for  the  purpose  of  furnishing  water  for  a  flouring  mill,  erected  on 
the  land  of  the  said  party  of  the  first  part,  and  owned  by  him. 
Now,  therefore,  this  indenture  witnesseth,  that  the  said  party  of 
the  first  part,  for  and  in  consideration  of  the  sum  of 
dollars  to  him  in  hand  paid  by  the  party  of  the  second  part,  at  or 
before  the  sealing  and  delivery  hereof,  (the  receipt  whereof  he  does 
hereby  acknowledge,)  has  granted,  bargained,  sold,  released,  and 
confirmed,  and  by  these  presents  does  grant,  bargain,  sell,  release, 
and  confirm,  unto  the  said  party  of  the  second  part,  his  heirs  and 
assigns,  all  the  water  of  the  said  stream  of  water,  which  may  or 
can  be  led  and  conveyed  from  the  easterly  side  of  the  said  dam,  in 
a  race,  or  flume,  to  be  constructed  at  the  cost,  charge,  and  expense 
of  the  party  of  the  second  part,  feet  in  width,  and 

feet  in  depth,  measuring  from  the  surface  of  the 
embankment,  forming  the  said  dam. 

To  have  and  to  hold  all  and  singular  the  said  casement  and 
privilege  to  the  said  party  of  the  second  part,  his  heirs  and  assigns 
forever,  as  appurtenances  belonging  to  his  and  their  lands  as  afore- 
said. 

GEORGE  L.  STEDMAN,  [l.  e.] 

In  witness  whereof,  &c. 


492  APPENDIX. 

31.  Confirmation  of  Deed  hy  Endorsement  hy 
Infant  on  coming  of  Age. 

jBe  it  known  tliat  the  within  Indenture  was  executed  by  J. 
Oscar  Culver,  therein  named,  while  under  the  age  of  twenty-one 
years,  who  has  now  attained  his  full  age  of  twenty-one  years ;  and 
that  the  said  J.  Oscar  Culver  has  on  this  day  of  j 

sealed  and  delivered  this  present  indenture  as  his  own  act  and 
deed. 

In  witness  whereof,  the  said  J.  Oscar  Culver  has  hereunto  set 

his  hand  and  seal,  the  day  and  year  above  written.     Sealed  and 

delivered. 

J.  OSCAR  CULVER,  [l.  s.] 

In  presence  of 


MOKTGAGE. 
32.  Mortgage  with  Power  of  Sale. 

This  Indenture  made  the  day  of  ,  one  thousand 

eight  hundred  and  sixty,  between  Cramer  Burt  of  , 

party  of  the  first  part,  and  John  C.  Boyd  of  ,  party  of  the 

second  part, 

Witnesseth,  that  the  said  party  of  the  first  part,  in  consideration 
of  five  hundred  dollars  to  him  duly  paid,  hath  sold,  and  by  these 
presents  doth  grant  and  convey  to  the  said  party  of  the  second 
part,  and  to  his  heirs  and  assigns  forever,  all  {here  describe  the 
premises  mortaged),  with  the  appurtenances  and  all  the  estate, 
right,  title,  and  interest  of  the  said  party  of  the  first  part  therein. 

This  grant  is  intended  as  a  security  for  the  payment  of  the  sum 
of  five  hundred  dollars,  which  the  said  party  of  the  first  part  is 
under  obligation  to  pay  to  the  said  party  of  the  second  part,  accord- 
ing to  the  condition  of  a  certain  bond  or  writing  obligatory,  bearing 
even  date  herewith,  executed  by  the  said  party  of  the  first  part  to 
the  said  party  of  the  second  part,  as  a  security  for  the  same,  which 
payment,  if  duly  made,  will  render  this  conveyance  void.  And  if 
default  shall  be  made  in  the  payment  of  the  principal  or  interest 


APPENDIX.  493 

above  mentioned,  then  the  said  party  of  the  second  part,  and  his 
assigns,  are  hereby  authorized,  pursuant  to  statute,  to  sell  the  prem- 
ises above  granted,  or  so  much  thereof  as  will  be  necessary  to  satisfy 
the  amount  hereby  secured,  with  the  costs  and  expenses  allowed  by 
law. 

In  testimony  whereof  [In  ordinary  form). 

CRAMER  BURT,  [l.  s.] 
In  presence  of 


33.  Mortgage  vnth  Covenant  to  Insure. 

This  Indenture  made  the  day  of 

between  Harris  M.  Plaisted  of 
of  the  first  part,  and  Charles  B.  Randall  of 

of  the  second  part,  Witnesseth,  that  the  said  party  of  the  first 
part,  in  consideration  of  to  him  duly  paid, 

hath  sold,  and  by  these  presents  doth  grant  and  convey  to  the  said 
party  of  the  second  part,  and  to  his  heirs  and  assigns  forever,  all 
(Jiere  describe  the  premises  intended  to  be  mortgaged),  with  the 
appurtenances,  and  all  the  estate,  title,  and  interest  of  the  said 
party  of  the  first  part  therein. 

And  the  said  party  of  the  first  part  covenants  with  the  said  party 
of  the  second  part,  and  his  assigns,  to  keep  the  building  now  stand- 
ing or  hereafter  to  be  erected  on  the  above-described  premises, 
Ihsured  in  some  solvent  insurance  company  in  the  State  of  New 
York,  to  the  amount  of  at  least  ,  and 

to  keep  the  policy  of  such  insurance  assigned  to  the  said  party  of 
the  second  part  and  his  assigns.  And  in  case  of  any  failure  in  this 
covenant,  the  party  of  the  second  part  or  his  assigns,  may  efiect  an 
insurance  to  the  amount  aforesaid,  and  the  premium  and  expenses 
of  such  insurance  may  be  added  to,  and  deemed  a  part  of  the 
moneys  hereby  secured.  This  grant  is  intended  as  a  security  for 
the  payment  of  according  to  tlie  condition 

of  a  certain  bond  or  writing  obligatory,  bearing  even  date  herewith, 
executed  by  the  said  party  of  the  first  part  to  the  said  party  of  the 
second  part,  as  a  collateral  security,  which  payment,  together  with 
all  the  premium  and  expenses  for  policies  of  insurance,  if  duly 


494:  APPENDIX. 

made,  will  render  this  conveyance  void.  And  if  default  shall  be 
made  in  payment  of  the  principal  or  interest  above  mentioned,  or 
in  keeping  said  premises  insured,  and  the  policy  assigned  as  herein 
covenanted  for,  then  the  said  party  of  the  second  part,  and  his 
assigns,  are  hereby  authorized,  pursuant  to  Statute,  to  sell  the 
premises  above  granted,  or  so  much  thereof  as  will  be  necessary  to 
satisfy  the  amount  then  due,  with  the  costs  and  expenses  allowed 
by  law ;  rendering  the  overplus,  if  any  there  may  be,  to  the  said 
party  of  the  first  part,  his  heirs  or  personal  representatives  or 
assigns. 

In  witness  whereof,  the  said  party  of  the  first  part  hath  here- 
unto set  his  hand  and  seal,  the  day  and  year  first  above  written, 
sealed  and  delivered. 

HARRIS  M.  PLAISTED,  [l.  s.] 

In  presence  of 


34.  Chattel  Mortgage. 

To  all  to  whom  these  presents  shall  come  greeting.  Know  ye  that 
I  Henry  M.  Perrin  of  ,  of  the  first  part, 

for  securing  the  payment  of  the  sum  of  ,  as 

hereinafter  mentioned,  and  in  consideration  of  the  sum  of  one  dol- 
lar to  me  in  hand  paid,  at  and  before  the  ensealing  and  delivery 
of  these  presents  by  Alexander  J.  Thompson  of  , 

of  the  second  part,  the  receipt  whereof  is  hereby  acknowledged, 
have  granted,  bargained,  and  sold,  and  by  these  presents  do  grant, 
bargain,  and  sell  unto  the  said  party  of  the  second  part,  all  and 
singular  the  goods  and  chattels  mentioned  and  expressed  ia  the 
schedule  hereto  annexed,  now  remaining  and  bemg  in 

.  To  have  and  to  hold  all  and  singular  the 
goods  and  chattels  above  bargained  and  sold,  or  intended  so  to  be, 
■unto  the  said  party  of  the  second  part,  his  personal  representatives 
and  assigns  forever.  And  the  said  party  of  the  first  part  for  him- 
self, his  heirs  and  personal  representatives,  all  and  singular,  the 
said  goods  and  chattels  above  bargained  and  sold  unto  the  said 
party  of  the  second  part,  his  personal  representatives  and  assigns, 
against  the  said  party  of  the  first  part,  and  against  all  and  every 


APPENDIX.  495 

person  and  persons  "wliomsoever  shall  and  will  warrant,  and  by 
these  presents  forever  defend. 

Upon  condition  that  if  the  said  party  of  the  first  part  shall  and 
do  well  and  truly  pay  or  cause  to  be  paid  unto  the  said  party  of  the 
second  part,  his  personal  representatives  or  assigns,  the  sum  of 

,  on  the  ,  then 

these  presents,  and  every  thing  herein  contained,  shall  cease  and 
be  void.  And  the  said  party  of  the  first  part,  for  himself,  his  per- 
sonal representatives  and  assigns,  doth  covenant  and  agree  with 
the  said  party  of  the  second  part,  his  personal  representatives  and 
assigns,  that  in  case  default  shall  be  made  in  the  payment  of  the 
said  sum  above  mentioned,  or  any  part  thereof,  it  shall  and  may 
be  lawful  for,  and  the  said  party  of  the  first  part  doth  hereby  au- 
thorize and  empower  the  said  party  of  the  second  part,  his  personal 
representatives  and  assigns,  with  the  aid  and  assistance  of  any  per- 
son or  persons,  to  enter  and  come  into  and  upon  the  dwelling-house 
and  premises  of  the  said  party  of  the  first  part,  and  in  such  other 
place  or  places  as  the  said  goods  or  chattels  are  or  may  be  held  or 
placed,  and  take  and  carry  away  the  said  goods  and  chattels,  and 
to  sell  and  dispose  of  the  same  for  the  best  price  they  can  obtain : 
and  out  of  the  money  to  retain  and  pay  the  said  sum  above  men- 
tioned, or  any  part  of  the  same  remaining  unpaid,  with  the  inter- 
est and  all  expenses  thereon,  rendering  the  overplus,  if  any,  unto 
the  said  party  of  the  first  part,  his  personal  representatives  and  as- 
signs. And  until  default  be  made  in  the  payment  of  the  aforesaid 
sum  of  money,  the  said  party  of  the  first  part  is  to  remain  and 
continue  in  quiet  and  peaceable  possession  of  the  said  goods  and 
chattels,  and  the  full  and  free  enjoyment  of  the  same,  uidcss  the 
said  party  of  the  second  part,  his  personal  representatives  or  as- 
,signs,  shall  sooner  choose  to  demand  the  same ;  and  until  such  de- 
mand be  made,  the  possession  of  the  said  party  of  the  first  part 
shall  be  deemed  the  possession  of  an  agent  or  servant,  for  the  sole 
benefit  and  advantage  of  his  principal,  the  said  party  of  the  sec- 
ond part. 

In  witness  whereof,  the  said  party  of  the  first  part  hatli  here- 
unto set  his  hand  and  seal  this         day  of  ,  in  the  year 

IIEXKY  M.  rEERIN,  [l.  b.J 
Sealed  and  delivered  in 

presence  of 


4:96  APPENDIX. 

Schedule  referred  to  in  the  foregoing  Mortgage. 

In  the  Parlor — One  maliogany  sofa,  ten  mahogany  chairs,  two 
large  looking  glasses,  one  table,  &c. 

In  Dining  Eoom — One  dining  table,  one  sideboard,  one  clock, 
&c. 

Dated 

HENRY  M.  PEEEIN. 
Witness 

35.  Certificate  of  Acknowledgment  of  Execution  of 
Deed  or  Mortgage  as  used  in  the  State  of  JSFeio 
Yorlc. 

Albany  County,  ss. 

On  this  first  day  of  June,  A.  D.  1860,  before  me  personally 
came  Andrew  Anderson,  Jr.,  and  Eoxana  his  wife,  to  me  known  to 
be  the  individuals  described  in,  and  who  executed  the  within  convey- 
ance, and  severally  acknowledged  that  they  executed  the  same : 
And  the  said  Koxana  acknowledged,  on  a  private  examination  by  me 
made,  apart  from  her  husband,  that  she  executed  the  said  convey- 
ance freely,  and  without  any  fear  or  compulsion  of  him. 

GEORGE  WOLFORD, 
Commissioner  of  Deeds  in  and  for  said  County. 

36.  Bill  of  Lading. 

Shipped  in  good  order  and  well  conditioned,  by  Henry  B.  Ath- 
erton,  on  board  the  ship  xalled  the  Eover,  whereof  Norman  Buck 
is  master,  now  lying  in  the  port  of  New 
SAMUEL  BARTON,     York,  and  bound  for  London,  England. 
London,  England        To  say,  ten  packages  of  merchandise,  be- 
ing marked  and  numbered  as  in  the  mar- 
gin, and  are  to  be  delivered  in  the  like  order  and  condition  at  the 
port  of  London,  England,  (the  damages  of  the  seas  only  excepted,) 
unto  Samuel  Barton,  or  to  his  assigns,  he  or  they  paying  freight 
for  the  said  packages  the  sum  of  dollars,  with  fifty 

cents  primage  and  average  accustomed. 

In  witness  whereof,  the  master  or  purser  of  said  vessel  hath 


APPENDIX.  497 

aflarmed  to  two  bills  of  lading,  both  of  this  tenor  'and  date  ;  ono 
of  which  being  accomplished,  the  other  to  stand  void. 

Dated  at  New  York  the  first  day  of  June,  one  thousand  eight 
hundred  and  sixty. 

NORMAN  BUCK,  Master. 


37.  Marine  Policy  of  Insurance  on  S/u'j)  and  Gooih. 

A.  B.  as  well  in  his  own  name,  as  for  and  in  the  name  and 
names  of  all  and  every  other  person  or  persons  to  whom  the  same 
doth,  may,  or  shall  appertaua,  in  part  and  in  all,  doth  make  assur- 
ance, and  cause  himself,  and  them,  and  every  of  them,  to  be  insured, 
lost  or  not  lost,  at  and  from 

upon  any  kind  of  goods  and  merchandises,  and  also  upon  the  body, 
tackle,  apparel,  ordnance,  munition,  artillery,  boat,  and  other  furni- 
ture, of  and  in  the  good  ship  or  vessel,  called  the 
whereof  is  master,  imder  God,  for  this  present  voyage, 

E.  T.  or  whoever  else  shall  go  for  master  in  the  same  ship,  or  by 
whatsoever  other  name  or  names  the  same  ship,  or  the  master  whereof, 
is  or  shall  be  named  or  called  ;  beginning  the  adventure  upon  the 
said  goods  and  merchandises,  from  the  loading  thereof  aboard  the 
said  ship,  &c.  And  further  until  the  said  ship,  with  all  her  ord- 
nance, tackle,  apparel,  &c.,  and  goods  and  merchandises  whatso- 
ever, shall  be  arrived  at 

npon  the  said  ship,  &c.,  until  she  hath  moored  at  anchor  twenty- 
four  hours  in  good  safety;  and  upon  the  goods,  and  merchan- 
dises, Until  the  same  be  there  discharged  and  safely  landed.  And 
it  shall  be  lawful  for  the  said  ship,  tfcc,  in  this  voyage,  to  pro- 
ceed and  sail  to,  and  touch  and  stay  at  any  ports  or  places  what- 
soever, 

without  prejudice  to  this  insurance.  The  said  ship,  and  goods  and 
merchandises,  &c.,  for  so  much  as  concerns  the  assurcds,  by  agree- 
ment between  the  assureds  and  assurers  in  this  policy,  aro  and 
shall  be  valued  at 

touching  the  adventures  and  perils  which  we  the  assurers  are  con- 
tented to  bear,  and  to  take  upon  us  in  this  voyage  ;  they  are  of 
the  seas,  men  of  war,  fire,  enemies,  pirates,  rovers,  thieves,  jetti- 
32 


498  APPENDIX. 

sons,  letters  of  mart,  and  countermart,  surprisals,  takings  at  sea, 
arrests,  restraints,  and  detainments  of  all  kings,  princes,  and  people 
of  what  nation,  condition,  or  quality  soever,  barratry  of  the  master 
and  mariners,  and  of  all  other  perils,  losses,  and  misfortunes  that 
have,  or  shall  come  to  the  hurt,  detriment  or  damage,  of  the  said 
goods  and  merchandises,  and  ship,  &c.,  or  any  part  thereof.  And 
in  case  of  any  loss  or  misfortune,  it  shall  be  lawful  to  the  as- 
sureds,  their  factors,  servants  and  assigns,  to  sue,  labor,  and 
travel  for,  in  and  about  the  defence,  safeguard,  and  recovery  of  the 
said  goods,  and  merchandises,  and  ship,  &c.,  or  any  part  thereof, 
without  prejudice  to  this  insurance ;  to  the  charges  whereof,  we 
the  assurers  will  contribute  each  one  according  to  the  rate  and 
quantity  of  his  sum  herein  assured. 

And  so  we  the  assurers  are  contented,  and  do  hereby  promise 
and  bind  ourselves,  each  one  for  his  own  part,  our  heirs,  executors, 
and  goods,  to  the  assureds,  their  executors,  administrators  and 
assigns,  for  the  true  performance  of  the  premises,  confessing  our- 
selves paid  the  consideration  due  unto  us,  for  this  assurance  by  the 
assured  at  and  after  the  rate  of 

In  witness  whereof,  we  the  assurers  have  subscribed  our  names 
and  sums  assured  this  day  of  ,  in  the  year 

Memorandum. — Corn,  fish,  salt,  fruit,  flour,  and  seed  are  war- 
ranted free  from  average,  unless  general,  or  the  ship  be  stranded. 
Sugar,  tobacco,  hemp,  flax,  hides,  and  skins,  are  warranted  free 
from  average,  under  £5  per  cent.  And  all  other  goods,  also  the 
ship  and  freight,  are  warranted  free  from  average,  under  £3  per 
cent. ;  unless  general,  or  the  ship  be  stranded. 


COPARTNEESHIP. 

38.  Partnership  Articles. 
Articles  of  Copartnership  made  and  entered  into  this 
day  of  ,  between  Jabez  Hammond,  of 

,  of  the  one  part,  and  Sevier  Wilson,  of  ,  of 

the  other  part,  Witnesseth  that  the  said  parties  hereto  having  mu- 
tual confidence  in  each  other,  do  hereby  form  with  each  other  a  co- 
partnership agreement  on  the  terms  and  conditions  following,  that 
is  to  say : 


APPENDIX.  499 

1.  The  copartnership  shall  be  for  carrying  on  the  business  of 

,  from  the  ,  day  of 

for  the  term  of  ten  years  thence  next  ensuinjr 
with  this  condition — that  either  party  may  be  at  liberty  to  dissolve 
the  copartnership  at  the  expiration  of  each  and  every  two  years 
from  the  period  of  its  commencement,  by  serving  upon  the  other, 
at  least  three  months  previous  to  such  expiration,  a  written  notice, 
specifying  that  a  dissolution  will  take  place  at  such  time. 

2.  The  said  copartnership  shall  be  conducted  and  carried  on 
under  the  copartnership  name,  style,  and  firm  of  Hammond  «k 
Wilson,  and  the  place  of  business  shall  be  at  ,  or  at  such 
other  place  or  places  as  the  partners  shall  hereafter  determine. 

3.  The  capital  of  said  copartnership  shall  consist  of  the  sum 
of  ,  to  be  contributed  equally  to  the  said  business  by  each 
of  the  parties  hereto,  the  same,  together  with  all  the  income  and 
profits  arising  from  the  employment  thereof,  with  the  exception  of 
what  each  is  entitled  to  draw  out  as  hereinafter  mentioned,  shall 
become  and  constitute  a  permanent  fund  for  copartnership  purposes. 
But  each  party  is  entitled  to  draw  out  from  the  profits  of  the  said 
business,  (for  his  own  separate  account,)  a  sum  not  exceeding 

at  the  commencement  of  each  and  every  month  while  the  said  co- 
partnership continues,  but  vnth  the  condition  that  all  such  sums  in 
the  aggregate  for  the  year  shall  not  exceed  his  share  of  the  profits 
of  the  said  copartnership,  and  if  he  do,  he  shall  repay  the  same  at 
the  close  of  the  y>ear ;  the  agreement  being  that  each  copartner 
shall  share  equally  in  all  the  profits  and  losses  that  may  arise  out 
of,  or  occur  in  the  prosecution  of,  the  said  copartnership  operations. 

4.  That  each  of  the  parties  hereto,  shall  diligently  employ 
himself  in  the  business  of  the  said  copartnersliip,  and  be  faithful 
to  the  other  in  all  transactions  relating  to  the  same,  and  give, 
whenever  required,  a  true  account  of  all  business  transactions 
arising  out  of,  or  connected  with,  the  conducting  of  the  copartner- 
ship, and  that  neither  one  of  these  parties  will  either  by  himself, 
or  with  any  other  person  or  persons,  directly,  or  indirectly,  engage 
in 'the  business  of  [that  of  the  copartnership],  or  in  any 
business  except  that  of  the  said  copartnership,  and  upon  account 
thereof,  and  that  neither  will,  without  the  written  consent  of  tho 


500  APPENDIX. 

other,  employ  either  the  capital  or  credit  of  the  copartnership  in 
any  other  than  copartnership  business. 

5.  That  books  of  account  shall  be  kept  by  the  said  partners, 
and  proper  entries  made  therein  of  all  the  moneys,  goods,  effects, 
debts,  sales,  purchases,  receipts,  payments,  and  all  other  trans- 
actions of  the  said  partnership ;  and  that  said  books  of  account, 
together  with  all  bonds,  notes,  bills,  assurances,  letters,  and  other 
writings  belonging  to  the  said  partnership,  shall  be  kept  where  the 
business  of  the  copartnership  shall  be  carried  on,  and  shall  be  at 
all  times  open  to  the  examination  of  each  copartner. 

6.  Neither  one  of  the  partners,  during  the  continuance  of  this 
copartnership,  shall  assume  any  liability  for  another  or  others  by 
means  of  indorsement  or  of  becoming  guarantor  or  surety,  without 
first  obtaining  the  consent  of  the  other  thereto. 

7.  At  the  expiration  of  each  and  every  year,  from  the  com- 
mencement of  this  copartnership,  an  account  of  stock,  effects, 
credits,  debts,  and  all  copartnership  transactions  shall  be  taken, 
and  the  true  condition  of  the  copartnership,  as  far  as  possible, 
arrived  at,  and  each  partner  agrees  to  lend  his  aid  and  services 
the  more  .completely  to  effect  this  object.  And  in  case  of  the 
determination  of  this  copartnership  from  whatever  cause,  the 
parties  hereto  agree  to  and  with  each  other,  that  they  will  make  a 
true,  just,  and  final  account  of  all  things  relating  to  their  said 
business,  and  in  all  things  truly  adjust  the  same.  And  after  all 
the  affairs  of  the  copartnership  are  adjusted,  and  its  debts  paid  off 
and  discharged,  then  all  the  stock  and  stocks  as  well  as  the  gains 
and  increase  thereof  which  shall  appear  to  be  remaining,  either  in 
money,  goods,  wares,  fixtures,  debts,  or  otherwise,  shall  be  divided 
ecLually  between  them. 

In  testimony  whereof  the  parties  to  these  presents  have  hereunto 
set  their  hands  and  seals  the  day  and  year  first  above  written, 

JABEZ  HAMMOND,  [l.  s.] 
SEVIER  WILSON,     [l.  s.J 

In  presence  of 

39.  Form  of  Notice  specified  in  foregoing  Articlee. 

To  Mk.  Jabez  Hammond  : 

SiK : — In  pursuance  of  the  liberty  reserved  under  the  first  pro- 


APPENDIX.  501 

vision  of    our  articles  of  copartnership,  I  hereby  give  you  due 
written  notice  that  the  copartnership  heretofore  existing  between 
us  under  the  copartnership  name,  style,  and  firm  of  Hammond  <fe 
Wilson,  will  be  dissolved,  and  cease  and  determine  on  the 
day  of  next.  Dated  at  ,  the 

day  of  ,  A.  D.  18G0. 

Respectfully  yours, 

SEVIER  "WILSON. 

40.  ^orm  of  Benewal  to  he  Endorsed  on  Articles. 

Inasmuch  as  the  partnership  formed  between  the  subscribers  by 
the  within  agreement  will  expire  on  the  first  day  of  January  next, 
It  is  hereby  agreed,  that  the  same  be  continued  upon  the  same 
terms  in  every  respect  as  is  within  mentioned,  for  the  further  term 
of  two  years  from  the  said  first  day  of  January  next. 

Witness  our  hands  and  seals  this  first  day  of  June,  one  thousand 

eight  hundred  and  sixty. 

JABEZ  HAMMOND, 
SEVIER  "WILSON. 

41.  Agreement  for  Dissolution  to  he  Endorsed  on 
Articles. 
We,  the  undersigned,  do  mutually  agree  that  the  copartner- 
ship formed  between  us  by  the  within  articles,  be  and  the  same  is 
hereby  dissolved,  except  for  the  purpose  of  the  final  liquidation  and 
settlement  of  the  business  thereof;  and  upon  such  settlement  then 
wholly  to  determine. 

Witness  our  hands  and  seals  {as  in  i^rcccding  form). 


POWEES    OF    ATTOrtXEY 
42.   General  Poicer. 

Know    all  men  by  these  presents,   that  I,  Oscar  Frisbie,  of 

,  have  made,  constituted,   and  appointed,   and  by  these 

presents  do  make,  constitute,  and  appoint  Clarence  L.  Burnet,  of 


502  APPENDIX. 

,  my  true  and  lawful  Attorney  for  me,  and  in  my  name, 
place  and  stead,  to  {here  insert  the  things  which  the  Attorney  is  to 
do)  giving  and  granting  unto  my  said  Attorney  full  power  and 
authority  to  do  and  perform  all  and  every  act  and  thing  whatsoever 
requisite  and  necessary  to  be  done  in  and  about  the  premises,  as 
fully,  to  all  intents  and  purposes,  as  I  might  or  could  do  if  person- 
ally present,  with  full  power  of  substitution  and  revocation,  hereby 
ratifying  and  confirming  all  that  my  said  Attorney  or  his  substitute 
shall  lawfully  do  or  cause  to  be  done  by  virtue  hereof. 
In  witness  whereof,  &c.  {tli§  usual  close). 

OSCAE  FEISBIE,  [l.  s.] 
In  presence  of 

[Statement  of  some  special  matters  to  le  inserted  as  "  things  to  he 
done'^  in  the  foregoing  general  form,  the  commencement  and  close  being 
as  in  said  form.'] 

43.  To  Collect  Debts. 

To  demand,  ask,  sue  for,  collect,  and  receive,  all  sums  of  money, 
debts,  rents,  dues,  accounts^  and  other  demands  of  every  kind, 
nature,  and  description  whatever,  which  are  due,  owing,  or  payable 
to  me  from  any  person  or  persons  whomsoever,  and  to  give  good 
and  suflBcient  receipts,  acquittances,  and  discharges  therefor. 

44.  To  Sell  and  Convey  Heal  Estate. 

To  enter  into  and  take  possession  of  all  the  real  estate  belong- 
ing to  me,  situate  in  ,  and  to  bargain,  sell,  grant,  convey, 
and  confirm,  the  whole  or  any  part  thereof,  for  such  price  or  sum 
of  money,  or  on  such  terms  as  he  may  think  best,  and  for  me  and 
in  my  name  to  make,  execute,  acknowledge,  and  deliver  unto  the 
purchaser  or  purchasers  thereof,  good  and  sufiicient  conveyances, 
with  warranty  of  the  same ;  and  to  demand,  receive,  and  collect, 
all  sums  of  money  which  shall  become  due  and  payable  to  me  by 
reason  of  such  sale  or  sales. 

45.  To  Transfer  Stock 

To  sell,  transfer,  and  assign  all  stock  of  the  Mechanics'  &  Far- 


APPENDIX.  503 

mers'  Bank  of  tlie  City  of  Albany,  standing  in  my  name  on  the 
books  of  the  said  bank ;  with  power  also  of  Attorney  or  Attorneys 
under  him  for  that  purpose,  to  make  and  substitute  with  like  jjower, 
and  to  do  all  lawful  acts  requisite  for  eflecting  the  premises. 

46.  To   Vote  at  Election  of  Directors^  or  a  Proxy. 

To  vote  as  my  prosy  at  any  election  of  Directors  of  the  Mechanics' 
&  Farmers'  Bank,  according  to  the  number  of  votes  I  should  be 
entitled  to  vote  if  then  personally  present. 

47.  Substitution  to  he  Endorsed  on  tlw  Poicer  of  At- 
torney. 

Kjiow  all  men  by  these  presents,  that  I,  Clarence  L.  Burnet,  of 
,  by  virtue  of  the  authority  to  me  given  by  the  within- 
power  of  Attorney,  do  substitute  J.   Barton  Cook,  of  ,  as 

Attorney  in  my  stead,  to  do,  perform,  and  execute,  every  act  and 
thing  which  I  might,  or  could  do  by  virtue  of  the  within  power  of 
Attorney ;  hereby  ratifying  and  confirming  all  that  the  said  sub- 
stitute may  do  in  the  premises  by  virtue  hereof  and  of  the  within 
power  of  Attorney. 

In  witness  whereof,  &c.  [usual  close). 

CLARENCE  L.  BUENET,  [l.  s.] 

In  presence  of 

48.  Revocation  of  Poioer  of  Attorney. 

Whereas,  I,  Oscar  Frisbie,  of  ,  by  my  certain  power  of 

Attorney,  bearing  date  the  ,  did  ajipoint  Clarence  L.  Burnet 

of  the  same  place,  my  true  and  lawful  Attorney,  for  me  and  in  my 
name,  to  {here  state  what  he  was  authorized  to  do,  vsinrf  the  Ian- 
f/uage  made  tise  of  in  the  power  of  Attorney)  as  by  the  said  power 
of  Attorney,  reference  thereunto  being  had,  will  more  fully. appear. 

Therefore  know  all  men  by  these  presents,  that  I,  Oscar  Frisbie, 
aforesaid,  have  countermanded  and  revoked,  and  by  these  presents 
do  countermand  and  revoke  the  said  power  of  Attorney,  and 
authority  thereby  given  to  the  said  Clarence  L.  Burnet. 

In  witness  whereof,  &c.  {usual  close). 

OSCAR  FPJSBIE,  [l.  s.] 

In  presence  of 


504  *  APPENDIX. 

EELEASE. 

49.  General  Form. 

Know  all  men  by  these  presents,  that  I,  John  M.  Harrington, 
of  ,  in  consideration  of  one  hundred  dollars  to  me  in  hand 

paid  by  John  E.  Nelson  of  the  same  place,  have  released  and  for- 
ever discharged,  and  hereby,  for  myself,  my  heirs,  executors,  and 
administrators,  do  release  and  forever  discharge  the  said  John  R. 
Nelson,  his  heirs,  and  personal  representatives,  from  all  claim, 
demand,  and  cause  of  action  which  I  now  have,  or  may  hereafter 
have,  against  the  said  John  E.  Nelson,  by  reason  of  any  contract 
which  he  may  have  entered  into  with  me  for  any  purpose  whatever. 

In  witness  whereof,  &c.  {usual  dose). 

JOHN  M.  HAERINGTON,  [u  s.] 

In  presence  of 

50.  Special  Release. 

[Instead  of  words  '•'•for  any  cause  whatever,''''  as  in  last  example,  in- 
sert'\ 

Arising  out  of  any  dealings  or  transactions  between  myself  and 
the  said  John  E.  Nelson,  at  my  store  in  the  City  of 

51.  Release  of  Part  of  Mortgaged  P itemises. 

This  indenture,  made  this  between  Chester  C.  Conant, 

of  ,  and   David   D.    Colton,  of  ,  witnesseth :     That, 

whereas,  the  said  David  D.  Colton,  by  his  indenture  of  mortgage, 
bearing  date  the  ,  did  for  the  consideration,  and  for  the 

purposes  therein  mentioned,  convey  to  the  said  Chester  C.  Conant 
certain    lands    in  ,  and   of    which    the   lands   hereinafter 

described  are  part  and  parcel ;  and  the  said  David  D.  Colton,  on 
the  day  of  the  date  hereof,  has  paid  unto  the  said  Chester  C 
Conant   the   sum   of  dollars,  being   part   of    the   money 

secured  by  the  mortgage  aforesaid,  as  therein  specified,  on  which 
payment  the  said  Chester  C  Conant  hath  agreed  to  release  to  the 
said  David  D.  Colton,  his  heirs  and  assigns,  the  lands  hereinafter 


APPENDIX.  •  605 

described,  and  to  take  and  accept  the  residue  of  the  said  mortgaged 
premises  as  his  security  for  the  payment  of  the  moneys  remaining 
unpaid  on  the  said  mortgage.  Now,  therefore,  the  said  Chester  C. 
Conant,  in  consideration  of  the  premises,  and  of  one  dollar  in  hand 
paid,  doth  hereby  grant,  release,  assign,  and  make  over  to  the  said 
David  D.  Colton,  and  to  his  heirs,  and  assigns  forever,  all  that  part 
of  the  said  mortgaged  lands,  bounded  and  described  as  follows:  viz., 
(Jiere  describe  the  lands  released)  .-with  the  hereditaments  and 
appurtenances  thereunto  belonging,  or  anywise  appertaining.  To 
have  and  to  hold  the  lands  and  premises  hereby  released  and  con- 
veyed to  the  said  David  D.  Colton,  his  heirs  and  assigns,  to  his 
and  their  own  proper  use  and  behoof  forever,  free,  clear,  and  dis- 
charged of  and  from  the  lien  of  the  said  mortgage. 

In  witness  whereof,  &c.  [usual  close). 

CHESTER  0.  CONANT,  [l.  s.] 

In  presence  of 


WILL. 

52.  Of  Heal  and  Personal  Eatak. 

In  the  name  of  God,  Amen.     I,  Henry  D.  Stratton,  of 
being  of  sound  mind  and  memory,  do  hereby  make,  publish,  and 
declare  this  my  last  will  and  testament,  in  manner  following,  that 
is  to  say : 

First.  I  order  and  direct  my  executors  hereinafter  named,  as 
soon  after  my  decease  as  practicable,  to  take  possession  of  my  per- 
sonal estate,  and  to  convert  the  same  into  money  with  as  little 
delay  as  possible,  and  with  the  money  so  to  be  realized,  to  pay  oflf 
and  discharge  all  the  debts,  dues,  and  liabilities  that  may  be  exist- 
ing against  me  at  the  time  of  my  decease. 

Second.  I  give  and  bequeath  to  my  wife,  Pamela,  the  sum  of 
ten  thousand  dollars,  provided,  and  only  upon  condition,  that  she 
receive  the  same  in  lieu  and  discharge  of  all  right  of  dower  in  my 
real  estate,  her  election  to  be  made,  and  notice  given  within  three 
months  after  my  decease. 

Third.    I  give   and   ilevise  to  my  son  Henry,  his  heirs  and 


60G  •  APPENDIX. 

assigns,  all  that  tract  or  parcel  of  land,  situate,  lying,  and  being,  in 
{here  describe  the  2^remises)  together  with  all  the  hereditaments  and 
appurtenances  thereunto  belonging,  or  in  any  -svise  appertaining. 
To  have  and  to  hold  the  premises  above  described  to  the  said 
Ebenezer,  his  heirs,  and  assigns  forever. 

Fourth.  I  give  and  devise  all  the  rest  and  residue  of  my  real 
estate  of  every  name  and  nature  Avhatsoever,  unto  my  sons,  John 
and  James,  to  be  divided  equally  between  them,  share  and  share 
alike. 

Fifth.  I  give  and  bequeath  all  the  rest,  residue,  and  remainder 
of  my  personal  estate,  goods  and  chattels,  of  what  nature  or  kind 
soever,  and  of  the  moneys  realized  from  the  same,  except  what  is 
already  disposed  of,  to  my  daughters,  Joanna  and  Josephine, 
equally  share  and  share  alike. 

Lastly.  I  hereby  nominate,  constitute,  and  appoint  H.  B- 
Bryant,  J.  T.  Caulkins,  and  S.  S.  Packard  the  Executors  of  this  my 
last  Will  and  Testament,  hereby  revoking  all  former  wills  by  me 
made. 

In  witness  whereof  I  have  hereunto  set  my  hand  and  seal,  this 
day  of  ,  in  the  year 

HENRY  D.  STEATTOIT,  [l.  s.] 

The  above  instrument  was,  at  the  date  thereof,  signed,  sealed, 
published  and  declared,  by  the  said  Henry  D.  Stratton,  as,  and  for 
his  last  will  and  testament,  in  presence  of  us,  who,  at  his  request, 
and  in  his  presence,  and  in  the  presence  of  each  other,  have  sub- 
scribed our  names  as  witnesses  thereto. 

T7AEREN  P.  SPENCEE,  residing  at 

WILLIAM  H.  CLAEK,  residing  at 

53.   Codicil  to  a   Will. 

Whereas,  I,  Henry  D.  Stratton,  of  ,  have  made  my  last 

will  and  testament  in  writing,  bearing  date  the  ,  in  and  by 

which  I  have  given  and  bequeathed  to  my  daughters,  Joanna  and 
Josephine,  all  the  rest  and  residue  of  my  personal  estate,  share  and 
share  alike,  Now,  therefore,  I  do,  by  this  my  writing,  which  I 
hereby  declare  to  be  a  codicil  to  my  said,  last  will  and  testament, 


APPENDIX.  607 

and  to  be  taken  as  a  part  thereof,  order  and  declare  that  my  will 
is,  that  said  rest  and  residue  of  my  said  personal  estate,  and  the 
moneys  arising  therefrom,  as  described  in  said  will,  be  divided 
equally  between  my  said  two  daughters,  Joanna  and  Josephine, 
and  my  granddaughter  Helen,  the  only  child  of  my  deceased  eon 
Jacob,  share  and  share  aUke.  And  it  is  my  desire  that  this  codicil 
be  annexed  to,  and  made  a  part  of,  my  last  will  and  testament  as 
aforesaid,  to  all  intents  and  purposes. 

In  witness  whereof,  &c.  [^same  attestation  clause  as  in  tcill,  ex- 
cept thai  instead  of  reading  "  as  and  for  his  last  will  and  testament" 
read  "  as  and  for  a  codicil  to  his  last  will  and  testament.^'] 

[  Witnesses  and  residences  same  as  in  will.^ 


4 


INDEX 


WITH    REFERENCES    TO    TUE    SECTION 


ABAXDONMEXT  TO  INSURER, 

When  may  be  done,  570 

WTietlier  of  ship  or  voyage,  571 

WTiat  the  right  upon  English  and  American  rule,  673,  674 

Character  of,  574 

\Miat  insurer  first  to  determine  in  relation  to,  575 

What  and  to  whom  notice  given,  675 

What  it  must  be  of,  and  how  given,  576 

Effect  of,  when  made  and  accepted,  577 

Difference  between  English  and  American  rule  as  to  freight  ii|  cose  of,  577 
ACCEPTiUTE  OF  CHARTER, 

How  made,  57 

Of  proposition,  effect  of,  in  completing  contract,  14G 

In  what  terms  to  complete  contract,  152 

Of  goods,  necessary  to  fix  carrier,  494 
ACCEPTiVNCE,  DOCTRINE  OF, 

Apphcs  only  to  bills  of  exchange,  323 

"When  it  must,  and  may,  or  may  not,  be  applied  for,  323 

When  demandable  on  bills  payable  so  long  after  sight  or  demand,  324 

"WTiat  elements  enter  mto  and  form  the  consideration  of  each,  325 

When  promise  to  accept  equivalent  to,  327 

■\Miat  kind  of,  holder  may  demand,  329 

"What  the  drawee  may  offer,  32D 

When  qualified,  what  parties  they  affect,  330 

^^^len  anticipated,  binds  property  contained  in  pledged  receipt,  831 

Effect  of,  by  drawee,  332 

Supra  protest— when  done,  how,  what  the  effect  of,  333 

By  depositarj',  whether  general  or  special,  difference  bctwoea,  437 


510  INDEX. 

ACCEPTOR  OR  MAKER, 

What  should  be  satisfied  of,  before  paying,  344 

What  arrangements  holder  can  make  with,  without  discharging  indorser,  346 
ACCORD  WITHOUT  SATISFACTION, 

Effect  of,  228 

With  mutual  promises,  effect  of,  228 
ACT  OF  GOD, 

Common  carrier  not  liable  for  loss  by,  495 

What  is  meant  by  it,  496 

Illustrations  of  loss  by,  496 

When  carrier  is  liable  for  loss  by,  498" 
ACT  OF  MAN, 

Wherever  traceable,  carrier  is  liable,  496 
ACT  OF  INCORPORATION, 

"What  now  introduced  into,  57 
ACTS  OF  INCORPORATION  GENERAL, 

Now  generally  passed,  57 
ACTS  OF  CORPORATE  AGENTS, 

What  subject  to,  62 
ADMIRALTY,  COURT  OF, 

Power  over  vessel  and  owner,  9 
ADULTERY,  AS  A  CAUSE  OF  DIVORCE, 

Wlien  divorce  granted,  and  when  denied  for,  757 
ADVANCES, 

When,  and  under  what  circumstances  agent  entitled  to,  124: 
AFFREIGHTMENT,  CONTRACT  OF, 

Modes  of  termination  before  its  completion,  429 
AGENCY, 

What  it  is,  and  what  based  upon,  77 

Different  modes  of  creating,  79,  80,  81,  82 

Different  kinds  of,  83 

WTien  special,  what  the  rule  as  to  authority,  88 

Various  modes  by  wliich  it  is  terminated,  142 
AGENT, 

Who  may  be  appointed,  78 

What  he  may  be  appointed  to  do,  78 

Different  kinds  of,  84 

Authority — rule  of  interpretation  of,  85 

WTien  authorized  to  sell  on  credit,  89 

What  the  limitation  of  his  power  to  sell,  90 

Limitation  to  receive  money  on  written  security,  91 

"When  he  may,  and  may  not,  receive  payments,  92 

How  bound  to  obey  instractions,  100 

WTien  responsible  beyond  money  received,  101 

How  bound  to  execute  his  trust,  102 


INDEX.  611 

AGENT  (continued), 

When  possessing  skill,  what  bound  to  exercise,  102 

How  far  liable  for  injuries  affecting  pruicipal,  103 

In  what  cases  not  chargeable  with  breach  of  instructions,  104 

Cannot  in  equity  make  himself  adverse  party  to  principal,  105 

Confidence  between  and  principal,  105 
-    In  possession  of  property,  what  responsible  for,  106 

Under  what  circumstances  bound  to  make  insurance  on  property  in  posses- 
sion, 107 

For  what  liable,  in  case  of  omission  to  insure,  108 

WTiat  two  classes  of  questions  arise  in  contracts  made  by,  109 

When  cannot  be  purchaser  or  seller.  111 

WTien  required  to  accoimt  for  goods  sold,  112 

When  hable  for  moneys  of  principal  deposited,  113 

AVhen  and  how  far  bound  to  account  to  principal,  114 

Acting  under  joint  commission,  how  far  liable,  115 

Under  what  circumstances  may  assume  personal  liability,  116 

When  he  incurs  a  personal  liabiUty,  117 

Whennot  liable,  and  when  hablc,  to  third  persons,  119 

"When  liable  to  principal,  119 

IMain  right  of,  120 

Effect  of  illegal  contract  by,  121 

How  may  forfeit  right  to  commission,  122 

What  may  recover  beyond  his  commission,  124 

"WTien  entitled  to  advances,  124 

Rights  of,  as  against  third  persons,  125 

Conversion  by^  when  affects  the  principal,  133 

Representations  of,  when  affect  the  principal,  134 

'\\'hen  notice  to,  affects  the  principal,  135 

Piirchases  by,  how  affect  the  principal,  13G 

What  result  of  permitting  him  to  deal  as  if  he  were  principal,  137 

Acts  of,  how  affecting  the  principal,  139 

"When  delivery  of  goods  to,  is  delivery  to  principal,  HO 

Money  paid  by,  when  recoverable  back  by  principal,  141 

Perpetrating  fraud,  how  affects  contract,  179 
AGENT  OR  FACTORS'  LIEN, 

^\^lat  it  is,  how  far  extends,  and  whnt  is  covered  by  it,  G93 
ALIEN  FRIEND  AND  ALIEN  ENEiMY, 

What,  15 
ALTERATION, 

Effect  of,  in  discharging  contract,  239 

When  immaterial,  effect  of,  upon  contract,  240 

When  presumed  to  be  made,  24 1 
ANALYSIS  OF  SIMPLE  CONTRACT,  143 


512  INDEX. 

ANIMALS, 

How  far,  and  under  -what  limitations  carrier  liable  for  transportation  of,  500 

Who  have  died  on  their  passage,  ivhen  carrier  can  recover  for,  51G 
ANOTHER  ACTION  PENDING, 

Effect  of,  on  contract,  242 
ANSWER, 

What  the  character  of,  to  be  given  in  case  of  life  insurance,  617 
ANSWERS  TO  QUESTIONS, 

Effect  of,  -when  incorporated  into  policy  of  insurance,  616 
APPLICATION  OF  PAYMENTS, 

What  principles  govern,  225 

Applies  only  where  there  are  distinct  accounts,  226 
APPLICATION  FOR  INSURANCE, 

How  made  and  what  it  must  contain,  586 
ARBITRAMENT  AND  AWARD, 

Effect  of,  as  defence  to  contract,  243 
AETICLES  OF  CO-PARTNERSHIP, 

What  should  compose,  20 

How  read,  20 
ASSENT, 

Required  in  contract  of  sale,  641 

Of  owner,  always  required  for  transfer  of  property,  613 

Prevented  by  mistake  of  parties,  644 

Of  creditors,  how  implied  to  assignment,  670 

In  New  York  not  held  necessaiy  to  prove,  670 
ASSESSMENT  ON  PREMIUM  NOTE, 

When  necessary  to  maintenance  of  action,  613 
ASSIGNABILITY  OF  LIFE  POLICIES,  620 
ASSIGNEE, 

What  position  occupies  in  voluntary  assignment,  669 

Receiving,  impliedly  assents  to  assignment,  670 

Duty  of,  under  assignment,  687 

When  and  how  far  protected,  688 

Of  bond  and  mortgage,  does  not  lose  Ms  right  by  a  settlement  between  mort- 
gagor and  mortgagee,  706 
ASSIGNMENT  OF  POLICY, 

When  it  may  be  done,  600 

What  must  be  accompanied  by,  600 

How  prohibited  in  policy,  600 

What  sufficient  under  usual  prohibition,  601 

Effect  of,  as  to  rights  of  assignee,  602 
ASSIGNMENT  VOLUNTARY, 

Who  may  make,  666 

Question  as  to  right  of  making  by  one  partner,  667 

Can  be  made  by  one  partner  directly  to  creditor,  667 


INDEX.  5i3 

« 

ASSIGNMENT  VOLUNTARY  (continued), 

But  not  to  trustee  for  their  benefit,  G67 

Right  conceded  in  some  states,  GC7 

Nature  and  effect  of,  G69 

Difficulties  in  the  way  of,  609 

Provisions  in,  what  the  objects  sought  to  bo  accomplished  by,  C71 

Right  of  reservation  of  part  of  property,  and  effect  of,  672 

Can  reserve  to  assignor  no  right  or  interest  in  property  assigned,  673 

Void  if  it  directs  sale  to  be  made  on  credit,  675 

Or  directs  sale  for  available  means,  G75 

Cannot  reserve  to  assignor  power  to  make  future  preferences,  676 

Cannot  vest  in  assignee  any  such  power,  C7G 

Right  to  insert  provision  for  compromise  in  it,  677 

Once  made,  is  irrevocable,  677 

When  made  by  manufacturer,  while  factory  in  full  operation,  678 

Cannot  in  such  case  direct  assignee  to  work  up  stock,  678 

Inventory  and  schedules  form  no  necessary  part  of  it,  C79 

When  void  in  a  single  particular,  is  wholly  void,  681 

Effect  of  introducing  provision  into  it  coercing  creditors  to  release  thdr 
debts,  682 

When  in  State  of  New  York  pronounced  fraudulent  andvoid,  683 

As  to  whom  fraudulent  and  void,  686 

As  to  whom  valid,  although  fraudulent,  686 

Valid  until  called  in  question  by  proper  party,  687 

Duty  of  assignee  under  it,  C87 

When  acts  of  assignee  protected  under  it,  688 

When  creditor  can  question  validity  of,  689 
ASSIGNOR, 

Within  what  limits  may  appoint  his  own  assignee,  67-t 

Cannot  reserve  right  to  appoint  in  case  of  resignation,  674- 

May  direct  payment  of  debt  usurious  in  its  inception,  680 

Also  if  included  in  irregular  judgment,  680 
ATTORNEY  AND  SOLICITOR, 

What  lieu  entitled  to,  700 
AUCTION  SALES, 

Rule  of,  as  to  by  bidders  or  puffers,  186 

How  rendered  void  by  agreement  not  to  bid  at,  187 
AUTHORITY  STECLIL, 

Construction  of,  95 

How  varied,  96 

Cannot  be  delegated,  97 

How  executed,  98 

In  whose  name  executed,  99 

Of  agent,  what  to  be  gathered  from,  86 

33 


514  INDEX. 

AVERAGE, 

WTiat  it  is,  419 

BAGGAGE, 

Common  carrier  liable  for  loss  of,  492 

What  kind  of  carrier  liability  limited  to,  492 

Must  be  placed  under  carrier's  charge,  492 

"VVliat  the  character  of,  that  wiU  render  innkeeper  liable  for  loss,  4S6 
BAILEE, 

Liability  of,  where  work  fails  through  his  own  neglect,  478 
BAILMENT, 

How  defined,  431 

Of  property  as  contradistinguished  from  sale,  432 

Its  difiEerent  kinds,  and  the  principles  under  which  they  come,  433 
BANK, 

Omitting  to  cause  bill  or  .note  to  be  protested,  liable,  367 
BANKERS, 

What  lien  special  and  general  entitled  to,  700 
BARRATRY, 

"WTiat  it  means,  and  instances  of  it,  559 
BARTER, 

What  it  is,  and  when  prevailing,  624 
BILL  OF  EXCHANGE, 

Form  of,  270,  271,  272,  273     '  ■       „ 

Definition  of,  271 

Parties  to,  271 

Theory  of,  271 

When  it  assimilates  to  promissory  note,  275 

In  what  analogy  consists  between  it  and  note,  276 

Differences  between  it  and  check,  279 

Foreign  what,  inland  what,  280 
,  How,  when  drawn  in  one  state  payable  in  another,  280 

Difference  as  to  time  of  payment,  whether  before  or  at  matority,  297 
BILL  OF  LADING, 

Form  of,  410 

By  whom  signed,  what  piu^jose  answered  by,  410 

How  far  negotiable,  411 

WTiat  power  its  assignable  quality  gives  to  consignor,  412 
BILL  OF  SALE, 

Of  ship  required  to  be  recorded,  7 
BLOCKADE, 

As  a  perU  insured  against,  561 
BOARDER, 

Difference  betn'een,  and  guest,  481 

What  constitutes  a  person  such,  481 


INDEX.  515 

BOARDING-HOUSE  KEEPER, 

How  differing  from  an  innkeeper,  480 
BORROWER  OF  PROPERTY, 

Liable  for  ■what,  duties  of,  right  of  action  when  possession  is  injilred,  454 

Can  alone  set  up  usury,  204 
BOTTOMRY  BOND, 

AVhat  it  is,  its  form  and  substance,  rule  when  several,  412  6 

What  pledged  by  it,  and  what  remedy  on  it,  413 

Rights  of  lender  on,  when  ship  and  cargo  lost  through  defatilt  of  master,  4 1 4 

"What  the  character  of  the  lien,  and  when  made,  what  lender  must  convince 
himself  of,  416 

Under  what  circumstances  master  may  execute,  4 1 7 
BURDEN  OF  PROOF, 

Is  on  the  carrier  to  discharge  himself  from  liability,  499 

In  the  case  of  passenger  carrier,  524 

On  whom  in  action  against  innkeeper,  487 
BUSINESS  AND  ACCOMISIODATION  PAPER, 

What,  282 
BY-BIDDERS  OR  PUFFERS, 

Employment  of,  at  auction  sales,  186 
BY-LAWS  OF  A  CORPOP.ATION, 

By  whom  made,  63 

What  a  by-law  is,  63 

Rules  relating  to  it,  63 

CAilPHENE, 

Use  of,  prohibited  in  fire  policies,  591 

Means  its  nse  as  lighting  material,  691 
CANAL  BOAT, 

A  common  carrier,  489 
CANAL  BOAT  CARRIER, 

When  delivery  to,  snflBcient,  494 
CANONICAL  AND  CIVH.  DISABILITIES, 

^\'hat,  757 
CARRIER  COMMON, 

How  defined,  488 

What  two  elements  enter  into  the  composition  of,  488 

Different  kinds  of,  489 

"WTiat  defines  all  the  different  kinds  of,  489 

When  obliged  to  receive  to  transport,  403 

What  kind  of  goods  bound  to  receive,  493 

Liability  of,  if  he  declines  receiving,  493 

At  what  point  his  liability  commences,  494 

^Tiat  his  liability  fixed  bj-,  494 

AVhen  liable  for  loss  by  act  of  God,  498 


516  LNDEX. 

CARRIER  COMMON  (continued), 

Liable  for  loss  occasioned  hj  deviation,  498 

What  shown  to  charge,  and  what  he  shows  to  discharge,  499 

Hovr  far,  and  with  what  limitations,  liable  for  the  transportation  of  ani- 
mals, 500 

Right  of  limiting  or  restraining  liability,  501 

May  limit  liability  by  special  contract,  501 

May  not  so  limit  by  notice,  601 

By  water,  how  limit  their  liability,  501 

In  what  cases,  and  how  limit  his  liability  by  general  notice,  502 

In  the  absence  of  notice,  bound  to  inquire  as  to  goods  offered,  504 

Not  bound  to  inquire  where  notice  is  given,  504 

How  he  can  entirely  discharge  himself  from  liability,  506 

When  not  responsible  for  delays  occurring  without  his  default,  506 

Contract  to  deliver  when  and  how  suspended,  507 

Where  and  to  whom  to  deliver  goods,  508 

When  he  may  deliver  at  stopping  places  without  notice,  508 

When  his  delivery  is  sufficient  of  goods  carried  by  water,  509 

What  he  must  do  when  consignee  is  dead,  absent,  or  refuses  to  receive 
goods,  510 

When  excused  for  non-delivery  of  goods,  511 

His  rights,  what  they  are,  512 

Compensation,  means  of  enforcing,  513 

Right  to  demand  freight  in  advance,  513 

To  whom  he  looks  for  his  freight,  514 

Not  bound  to  receive  cargo  abandoned  for  freight,  515 

Right  to  freight  for  animals  who  have  died  on  their  passage,  516 

Right  to  ratable  freight  when  arising,  518 

His  freight  under  what  circumstances  and  conditions  apportioned,  519 

When  bound  to  receive  passengers,  520 

Liability  for  injuries  to  passengers,  520 

Under  what  obligations,  and  what  bound  to  do,  520 

How  bound  to  carry  passengers,  521 

What  answerable  for,  521 

Of  passengers,  may  prescribe  rules  and  regulations,  522 

Of  passengers,  how  may  limit  his  liability,  and  for  what  he  would  still  be 
Hable,  523 

Relations  sustained  by,  in  reference  to  right  of  stoppage  in  transitu,  720 
CESSION  OF  ACTIONS, 

What,  and  how  far  surety  entitled  to,  395 
CHANCERY, 

What  it  can  give  in  lieu  of  damages  at  law,  256 
CHARTER, 

What  it  is,  and  its  rule  of  construction,  Gl 

How  construed,  62 


INDEX.  517 

CHARTER  (continued), 

When  accepted  is  what,  57 
CHECK, 

Form  of,  270 

How  defined,  277 

"\ATiether  must,  or  may  not,  be  payable  to  bearer,  277 

How  far  analogous  to  bills  and  notes,  278 

Dififerences  between  it  and  bill  of  exchange,  279 

When  evidence  of  paj-ment,  3i5 

When  to  be  presented  for  payment,  3GI 
CHOSES  IN  ACTION  AND  IN  POSSESSION  OF  THE  WIFE, 

WTiere  they  go  upon  marriage,  740 

Assignable  in  equity,  not  at  law,  3 
CHOSES  IN  ACTION  OF  WIFE, 

Husband's  power  over,  when  reduced  to  possession,  7-41 
CIRCUMSTANCES, 

Difference  between  extrinsic  and  intrinsic,  and  rule  in  relation  to  each,  183 
CLASSES  OF  PERSONS  ENTITLED  TO  RIGHT  OF  LIEN,  C92 
CL.4.SSIFICATI0N  OF  RISKS, 

What,  and  what  conditions  introduced  in  reference,  and  what  will  not  be 
violation  of  such  conditions,  595 

Of  cases  in  reference  to  statute  of  frauds,  375 
COJEMON  CARRffiR  COMP.^NIES, 

Liability  of  receiving  company,  490 

WTien  liable  for  the  loss  of  money,  49i 

When,  and  on  what  principle,  liable  for  baggage,  492 

Right  of  lien  when  stolen  property  is  confided  to,  C9G 

What  lien  entitled  to,  special  and  perhaps  general,  700 
COmiUNIC^TIONS, 

"WTiat  insured  is  bound  to  make  to  insurer,  589 
COMPLIANCE  WITH  PROPOSITION, 

Same  effect  as  acceptance,  G42 
COMPOSITION  ARRANGEMENT, 

Good  without  release,  231 
COMPROMISE, 

As  a  mode  of  extinguishing  guaranty,  382 
CONCEALMENT  OF  LATENT  DEFECTS, 

When  avoids  contract,  184 
CONDITION, 

As  to  other  insurance  on  same  property.     What  is  meant  by  it,  and  kind  of 
notice  necessary,  592 

As  to  notice  of  futiire  insurance,  what,  and  how  complied  with,  593 

What  different  insurers  shall  pay  ratably  in  case  of  loss,  what,  and    its 
effects,  594 


518  INDEX. 

CONDITIONS, 

How  made  a  part  of  a  fire  policy,  590 
CONFUSION, 

As  a  mode  of  extinguishiiig  guaranty,  389 
CONSIDERATION, 

What  it  is,  158 

Its  analysis  and  elements,  159 

How  far  entnisting  another  with  property  is  a  consideration,  160 

A  promfSe  as  consideration  for  a  promise,  161 

Pre-existing  moral  obligation,  sufficiency  of,  162 

Forbearance,  sufficiency  of,  1G3 

Impossible,  contract  not  sustainable,  165 

Impossibility  of,  how  far  to  go,  16G 

Past  or  executed,  when  sufficient,  168 

In  case  of  bailment,  the  deliveiy  and  acceptance,  431 

Necessary  in  a  guaranty,  analysis  of,  371 
CONSIGNMENT, 

Who  may  control  same,  100 
CONSIGNOR, 

When  may  control  assignment,  100 
CONSTRUCTION, 

Rule  of,  -when  applied  to  conditions,  598 

Rule  of,  on  provisions  in  case  of  loss,  607 
CONSTRUCTIVE  DELIVERY, 

WTiat  it  is  to  be,  sufficient  to  destroy  right  of  stoppage  in  transitu,  717 
CONTINUING  OR  STANDING  GUARANTY,  WHAT,  380 
CONTRACT, 

Simple,     What  it  ^is,  and  -what  it  yields  on  analysis,  143         ^ 

"What  necessary,  as  to  union  of  minds,  Hi 

TMiat  the' first  thing  presenting,  145 

If  made  by  letter,  when  completed,  151 

How  implied  from  circumstances,  154 

'V\Tien  consent  implied,  and  promise  -where  none  existed,  155 

Express  and  implied,  how  affected  by  usage  and  custom  of  trade,  156 

"When  in  restraint  of  trade,  what  effect  of,  general  and  partial,  14 

Where  one  consideration  is  frivolous  or  insufficient,  167 

Difference  between,  when  verbal  and  in  writing,  169 

Illegal,  general  rule  relating  to,  175 

What  void  for  immoraHty,  176 

"WTiat  void  as  against  public  policy,  177 

As  contravening  insolvent  laws,  177 

As  restraining  marriage,  177 

As  impeding  the  course  of  justice,  177 

Rendered  void  by  fraud,  178 

How  affected  by  fraud  of  agent,  179 


INDEX.  519 

CONTRACT  (contmued), 

Fraud  renders  voidable,  180 

How  affected  by  constructive  or  legal  fraud,  181 

How  affected  by  false  and  fraudulent  representation,  182 

How  afifected  by  suppression  of  facts,  183 

How  made  void  by  statute,  1 88 

Rule  of,  as  to  being  void  by  common  law  or  statute,  189 

Made  void  by  statute  inflicting  penalty,  VjO 

Rule  of  construction  of,  207 

^^'ho  the  party  to  perform,  208 

What  the  manner  of  its  performance,  209 

How  to  be  performed,  210 

Time  of  performance,  211 

AVhat  will  excuse  non-performance  of,  212,  213 

Performance  of,  when  condition  precedent,  and  concurrent  consideration, 
214 

T\Tien  party  may  and  may  not  rescind,  21^,  210 

How  rescinded,  if  at  all,  217 

By  whom  rescinded,  218 

When  party  may  rescind  and  recover  back  money,  219 

^Yhon  fui-ther  performance  may  bo  excused,  220 

Test  as  to  right  to  rescind,  221 

Persons  to  whom  payment  may  be  made,  222 

Part  payment  in  satisfaction  of,  223 

Under  what  circumstances  payment  of,  presumed,  22-t 

Modes  in  which  pajonent  may  be  made,  22-t 

Principles  governing  application  of  payments  in,  225 

Payments  in  cases  where  several  accounts  are  treated  as  one,  220 

Good  by  one  company  of  carriers  to  carry  over  whole  route  through  differ- 
ent states,  490 

To  assume  mandate  trusts,  of  no  legal  validity,  440 

Of  mandate,  modes  of  dissolution  of,  4.'51 

Alteration  of,  as  a  mode  of  extinguishing  guaranty,  380 
CONTRIBUTION, 

Right  of  co-surety  to,  when,  what,  and  on  what  princijilo  grotmdc*!,  397 

Advantages  of  seeking  same  in  equity,  398 

When,  and  when  not,  enforcealjlc,  when  sureties  become  snch  by  different 
instruments,  399 

^\^len  only  can  bo  resorted  to  by  one  surety  against  another,  400 

What  cannot  bo  recovered  by  one  surety  agaiiLst  another,  401 
CORPORATION  AGGRKGATE, 

W\\at  it  consists  of,  r>0 

What  a  creature  of,  and  its  qualities,  56 

How  created,  and  power  how  exercised,  57 

Acceptance  necessary,  57 


520  INDEX. 

CORPORATION  AGGREGATE  (continued) 

Its  powers  enumerated,  58 

Governmental.     How  created,  and  instances  of,  59 
CORPORATION  STOCK, 

Instances  of,  bow  created,  60 

Bound  by  act  of  majority,  6i  "" 

Is  its  board  in  joint  stock  companies,  65 

Limitation  of  its  power  in  making  contracts,  67 

When  held  liable  beyond  powers  expressly  granted,  67 

When,  and  how,  acting  through  agents,  68 
t    What  acts  and  contracts  capable  of  making,  70 

When  liable,  and  not  liable,  for  negligence  and  imskilfuhiess  of  agents,  70 

Not  Hable  for  wilful  and  intentional  act  of  agent,  72 

Dissolution  of,  73,  74,  75 

Consequences  of  its  dissolution,  76 
CREDIT, 

Existing  either  by  agreement  or  usage,  destroys  right  of  lien,  709 
CREDITOR, 

When  in  condition  to  question  validity  of  voluntary  assignment,  689 

What  securities  entitled  to,  of  principal  debtor  and  surety,  391 

Entitled  pro-rata  in  case  of  assignment  by  principal  debtor,  392 

May  limit  himself  to  one  part  owner  of  a  ship,  9 

Of  partnership,  and  of  individual  partner,  how  reahze   their  respective 
debts,  49 

DAIVIAGES, 

What  they  are,  and  come  in  lieu  of,  256 

Can  be  agreed  upon  in  advance  and  liquidated,  257 

When  sum  may  be  recovered  as  liquidated,  258 

When  recoverable  under  penalty,  259 

General  principle  as  to  -whether  liquidated  or  penalty,  260 

Where  entire  claim  is  for,  261 ' 

Where  only  nominal,  261 

Rule  of  civil  law  in  relation  to,  262 

Sometimes  dependent  upon  circumstances,  263 

When  as  punishment,  and  when  compensatory,  264 

What  profits  included  under,  265 

■When  recoverable  after  suit  commenced,  266 

How  classified  and  arranged,  267 

When  not  controlled  by  agreement  of  parties,  268 

Party  required  to  protect  himself  from,  269 
DANGERS  OF  THE  RIYER, 

How  compared  with  perils  of  the  seas,  497 
DAYS  OF  GRACE, 

"WTiat,  when  allowable,  effect  of,  337 


INDEX.  521 

DEBT, 

EfiPect  of  transfer  of  negotiable  paper  upon,  317 

■\VTicn  taken  in  payment  of,  317 

Must  be  extinguished  to  make  creditor  bona  fido  holder  of  paper  for  value 
318 

Against  partnership,  both  joint  and  several,  4G 
DEBTOR  PRINCIPAL, 

Default  of,  before  surety  liable,  3'JO 
DECEPTION, 

When  practised,  what  remedies  it  gives,  CGI 
DEED, 

Exception  and  limitation  as  to  binding  partnership,  38 
DEFENCES  AND  EQUITIES, 

To  -which,  party  takes  note  after  it  falls  due,  311 

Under  what  circumstances  subject  to,  when  taken  before  due,  313 

The  most  commonly  interposed  to  negotiable  paper,  304 

When  and  how  interposed,  and  when  available,  3G5 
DEFINITION  OF  COMMON  CARRIER,  488 
DELIVERY, 

Of  goods  to  carrier  necessary  to  fix  his  liability,  494 

What  sufHcient  to  a  canal  boat  carrier,  494 

WTien  to  servant  *r  agent  of  carrier  Sufficient,  494 

To  consignee  discharges  carrier,  50G 

When  to  be  made  to  consignee  within  reasonable  time,  506 

AVhat  the  consequence  of  not  making  in  reasonable  time,  50G 

By  carrier,  where  and  to  whom  to  be  made,  608 

When  may  be  made  at  stopping  places  without  notice,  508 

Of  goods  carried  by  water,  when  sufficient,  509 

What  will  excuse  the  carrier  from,  511 

Of  note,  what  obligations  it  creates,  321 

Kind  of,  required  by  statute  of  frauds,  C50 

Acceptance,  what  sufficient  under  the  statute,  G51 

Its  different  kinds,  and  what  necessary  to  transfer  title,  C54 

\Yiicn  sufficient  to  vest  title  in  vendee,  G55 

Symbolical,  and  diflferent  kinds  of,  G5G 

When  that  alone  is  wanting,  vendee  cannot  refuse  to  receive  goods,  057 

Place  of,  in  contract  of  sale  and  piijTuent  of  debt,  G5S 
DEMURRAGE, 

What  it  is,  40G 
DEPOSIT, 

In  bailment  how  defined,  435 

When  it  may  be  used  by  depositar}',  438 

Obligations  of  depositary  to  rctuni,  what  embraced  in  it,  and  when  ex- 
cused, 440      ' 

May  always  be  returned  to  true  owner,  441 


522  .  INDEX. 

DEPOSIT  (continued), 

How  restored  in  case  of  joint  bailment,  and  its  place  of  restoration,  442 
DEPOSITARY, 

AVTiat  obligations  under,  436 

When  only  liable,  441 

Mandatary,  bow  liabilities  may  be  changed,  449 
DEPOSITAKIES  JOINT, 

How  liable,  442 

To  what  entitled  to  reimbursement,  443 
DEPOSITARIES  P'OR  HIRE, 

Wlio  they  are,  and  what  liabiUties  assume,  479 
DEVIATION, 

What  it  is,  and  effect  of,  567 

From  necessity,  what  effect,  568 

^^Tien  justifiable,  and  when  not,  568 

Carrier  liable  for  loss  occasioned  by,  498 
DIRECTORS  OF  A  CORPORATION 

Can  only  act  when  assembled  as  a  board,  65 
DISABILITIES, 

What,  15 

Canonical  and  civil,  what,  and  how  they  affect  divorce,  757 
DISCUSSION,  , 

What,  and  under  what  law  surety  entitled  to,  393 

How  far  permitted  by  our  jurisprudence,  394 
DISPEPSIA,  '      . 

Not  a  disease  tending  to  shorten  life,  618 
DISSOLUTION  OF  PARTNT:RSHIP, 

Modes  of,  47 

Immediate  consequence  of,  48 

When  occurring  through  death  of  partner,  what  result,  49 

One  direct  consequence  of,  50  ^ 

Effects  of,  how  disposed  of,  50 
DIVORCE, 

Different  kinds  of,  and  how  created,  757 

Causes  for  which  it  will  be  granted,  757 

A  mensa  et  thoro,  effect  of,  and  causes  for  granting  same,  758 

Foreign,  when  legal  and  valid,  and  when  illegal  and  invalid,  759 

Where  parties  married  in  one  State,  regularly  apply  for  it  in  another,  which 
prevails,  the  lex  loci  or  lex  domicilii,  760 
DORMANT  OR  CONCEALED  PARTNER, 

^Vhat,  24 
DOUBLE  INSURANCE, 

What,  and  what  rights  it  gives,  537 
DRA^^TIE, 

What  must  be  satisfied  of,  before  accepting,  326 


INDEX.  533 

DRAWEE  (continued), 

May  offer  any  acceptance  he  chooses,  329 

What  the  effect  of  his  acceptance,  332 
DRAWER  OF  CHECK, 

"When  exonerated  by  want  of  notice  of  non-payment,  361 

EFFECTS  OF  PARTNERSHIP, 

How  disposed  of,  on  dissolution,  50 
EJffiARGO, 

■What,  as  a  peril  insured  against,  5C1 
ENTITIES  LEG^yL, 

How  many,  and  what  they  are,  25 
EQUITABLE  LIEN, 

What,  690 
EQUITIES,  BALANCE  OF, 

Curious  case  suggested  by  Lord  Hard  wick,  110 
EQUITY, 

How  it  distributes  partnership,  and  individual  funds,  in  payment  of  debts, 

46,49 
EXCEPTIONS  TO  RULE, 

Requiring  mutuality  of  assent  and  obligation,  153 
EXTRINSIC  CIRCUMSTANCES, 

Rule  in  relation  to,  183 

FACTOR, 

When  he  may  legally  control  consignment,  100 
FALSE  AND  FRAUDULENT  REPRESENTATIONS, 

How  affecting  contract,  182 
FIRE, 

A  peril  insured  against,  how  occasioned,  558 
FIRE  INSURANCE, 

When  insured  must  have  interest  in,  584 

"When  double  insurance  may  be  effected  upon  snmo  sulioi-t  mattrr,  'M 
FORBEARANCE, 

As  a  consideration,  163 
FRAUD, 

■\\Tiat,  and  how  affecting  contracts,  178 

AVhat  the  effect  of,  wlicn  perpetrated  by  agent,  179 

Renders  contract  voidable,  180 

Who  can  take  advantage  of,  180 

When  constructive  or  legal,  181 

Upon  third  persons,  when  occurring,  185 

When  avoiding  contract  of  salo,  645 

Classification  of,  by  Lord  Hardwick,  645 

Practice  of,  does  not  destroy  lien,  703 


624:  INDEX. 

FRAUD  (continued), 

And  imposition,  as  a  mode  of  extinguishing  guaranty,  387 
FRAUDS,   STATUTE  OF, 

What,  and  what  included  under,  1 70 

\Vliat  the  tests  of  contracts  coming  under,  171,  173 

What  writing  must  state  when  under  statute,  174 
FREIGHT, 

May  be  demanded  by  carrier  in  advance,  513 

Consequence  of  not  so  demanding,  513 

What  it  is,  and  when  considered  earned,  513 

What  gives  to  it  inception,  514 

Wlio  liable  for  to  carrier,  514 

Cannot  be  discharged  by  abandonment  of  cargo,  515 

Of  animals  dying  on  passage,  when  carrier  can  recover  for,  516 

When  paid  in  advance,  tmder  what  circumstances  recoverable  back,  517 

Eatable,  right  to,  in  what  cases  arising,  518 

AVlicn,  and  under  what  conditions,  apportioned,  519 

Under  what  circumstances  insurable,  532 

Difference  between  English  and  American  rule  in  case  of  abandonment,  577 
FUNDS  OF  PARTNERSHIP,  AND  OF  INDIVIDUAL  PARTNER, 

How  applied  in  payment  of  debts,  4G 

GENERAL  AVERAGE, 

What  it  is,  and  under  what  circumstances  arising,  419 

WTiat  limited  to,  420 

What  may  be  included  under,  421 

What  the  principle  of,  and  what  it  embraces,  422 

What  the  character  of  loss  covered  by  it,  423 

Wliat  the  character  of  the  goods  that  contribute  to  it,  424 

Mode  of  adj  ustment  of,  425 

Adjustments  of,  conclusive,  581 
GENERAL  LIEN, 

What,  693 
GOOD  WILL, 

What  it  consists  in,  and  when  questions  relating  to,  arise,  10 

When  it  survives,  and  when  it  does  not,  and  its  ownership,  10 
GUARANTOR, 

Liability  of,  when  on  note  payable  to  bearer,  and  in  such  case  how  entitled 
to  notice,  377 
GUAR.\NTY, 

What  it  is,  370 

Consideration  in,  necessary,  and  analysis  of,  371 

Undertaking  accessorial,  when  assumes  character  of  principal  debtor,  372 

Consent  of  party  to  whom  promise  given  necessarj-,  consequence  thereof,  373 

Warranty  and  suretj-ship,  how  agree,  and  how  differ,  from  each  other,  374 


INDEX.  525 

GUARANTY  (contlnnod), 

Is  collateral  engagement  for  another,  and  within  statute  of  fraods,  375 

Classification  of  cases  in  rcforenco  to  statute  of  fraud*,  375 

Not  enforceable  without  consideration  expressed,  375 

"NVhen  negotiable,  and  when  not,  378 

How  to  be  construed,  379 

"When  continuing  or  standing,  380 

Or  suretyship,  modes  of  terminating,  881,  382,  383,  384,  385,  386,  387, 
388,  389 

To  one  partner,  when  available  to  firm,  35 
GUEST, 

^^'hat  constitutes  a  person  such,  481 

And  boarder,  differenco  between,  481 

HIRE  OF  THINGS, 

What  essential  to,  470 
HIRER, 

His  property  in,  and  right  to,  the  thing  hired,  472 

His  obligation  as  to  use  of  thing  hired,  473 

The  care  and  diligence  ho  is  boimd  to  exercise,  474 

His  duties  as  to  restoring,  and  the  modea  hy  which  contract  may  bo  termi- 
nated, 475 
HIRING, 

Contract  of,  how  defined,  and  extent  of,  409 

Of  labor  and  services,  where  it  applies,  and  who  takes  risk  of  lou,  4  70 
HOLDER  OF  BILL, 

^\^lat  right  to,  as  to  acceptance,  329 

What  to  do  if  conditional  acceptance  offered,  329 

When  to  present  for  pa^inent,  334 

Duty  of,  when  bill  or  note  is  payable  at  particular  place,  335 

"NVhat  arrangements  ho  may,  and  may  not^  make  with  acceptor  or  maker, 
without  discharging  indorscr,  34G 

Why  necessary  to  take  steps  on  dishonor  of  paper,  349 

What  must  do  in  caso  of  foreign  bills  of  exchange,  350 

What,  after  demand  and  refusal  of  acceptance,  351 

Who  is  such,  suflicient  to  give  notice,  855 

■\Vliat  to  do  when  ignorant  of  residence  of  drawer  or  indorscr*,  3C0 

What  enables  him  to  look  to  all  parties  on  paper,  303 

How  to  pursue  remedies  against  such  parties,  8C3 

Bona  fide  when  not  protected,  304 

When  and  how  affected  by  defences  intcrposcl,  305 

Wlien  may  bring  action  before  bill  falls  due,  3CG 
HOLDER  OF  LOST  lULL  OR  NOTE, 

What  course  to  pursue,  309 

^Vhat  his  position,  diflicultics  and  rights,  309 


526  INDEX. 

HUSBAND, 

What  property  marriage  gives  him  in  the  real  estate,  chattels  real,  and  per- 
sonal property  of  the  wife,  739 

HUSBAND  AND  WIFE, 

Principle  lying  at  the  foundation  of  the  relation,  738 
What  becomes  of  wife's  choses  in  action  upon  marriage,  740 
When  former  may  be  required  to  make  provision  for  latter  out  of  her  prop- 
erty, 741 
Relief  of  latter  in  courts  of  equity,  745 

Circumstances  imder  which  latter  controls  her  personal  property,  746 
When  latter  can  contract  obligations  to  others,  and  how  enforced-,  746 
How  liability  of  latter  for  her  own  debts  affected  by  marriage,  747 
Power  of  disposition  of  latter,  by  what  means  restrained,  748 
How  latter  contracts  with  former,  and  mode  of  conveying  real  estate,  749 
Latter  not  liable  on  covenants  entered  into  during  marriage,  749 
When  and  how  latter  may  dispose  of  property  by  -wall,  and  by  executing  re- 
served power,  750 
When  marriage  settlements  in  favor  of  latter  valid  and  enforceable,  751 
Cannot  be  witnesses  for,  or  against,  each  other,  753 
How  far  declarations  of  latter  affect  former,  752 
Eights  of  latter  by  legislation  in  New  York,  753 

HUSBAND'S 

Liabilities  for  debts  of  wife  at  time  of  marriage,  and  how  released  from 

them,  742 
Obligation  to  the  wife  and  to  third  persons,  743 
Liability  to  others  for  her  tortious  acts,  743 

HYPOTHECATION, 

When  analogous  to  pledge,  455 

IMMORALITY, 

What  contracts  void  for,  176 
INDIVIDUAL  DEBTS  OF  PARTNER, 

Out  of  what  fund  paid  in  equity,  40 
INDORSEMENT, 

What  the  essential  elements  in,  294 

When  presumptively  made,  295 

Place  where  made,  296 

How  made  in  case  of  death  of  payee,  299 

Wlien  payable  to  partnership,  300 

When  payable  to  several  not  partners,  301 

By  whom,  in  case  of  trusteeship,  302 

By  whom,  in  case  of  married  women,  303 

What  two  modes  of,  303 

What  sufficient  in  blank,  304 

In  full— when,  how,  and  what  effect  of,  305 


DTDEX.  507 

INDORSEMENT  (contmue.l), 

In  full,  who  may  write  it,  for  what  purpose,  and  with  what  effect,  30C 

What  two  ofiices  it  performs,  307 

■\Vlmt  contract  is  made  by  it,  and  with  whom,  307 

Effect  of,  whether  done  before  or  after  paper  falU  due,  309 

How  made  to  transfer  without  liability,  314 

Follows  nature  of  original  contract,  315 

How  long  continues  revocable,  31G 

Similar  to  drawing  bill,  and  has  same  conscquoncos,  313 

"What  evidence,  and  effect  of,  320 
INDORSEE, 

What  should  be  satisfied  of  before  paying,  34-t 

^Vhat  arrangements  holder  can  make  with  acceptor  or  maker  viihout  di*- 
charging,  346 
INFANCY,  *■ 

Acts  of,  how  ratified  and  when,  15 
INFANT, 

Who  is  such,  728 

What  contracts  botmd  by,  729 

■^Tiat  are  necessaries,  how  and  when  bound  for  them,  729 

What  valid  acts  ho  may  do,  731 

What  acts  are  good,  voidable,  and  void,  732 

How  may  avoid  deeds,  writings,  and  contracts,  733 

When  sale  of  chattels  and  real  estate,  733 

What  safest  course  as  to  afBrmancc  or  disaffirmance,  733 

How  liable  for  torts  or  wrongs,  and  what,  730 
INJURY, 

To  insured  vessel,  mode  of  adjustment  of,  582 
INN, 

How  defined,  how  regulated,  special  trust  not  assignable,  480 
INN-KEErER, 

Who  he  is,  and  how  differing  from  boarding-house  keeper,  480 

Whom  bound  to  receive,  and  whom  may  reject,  liability'  of  for  baggage,  4t'2 

Responsibility  of,  for  guest  and  baggage,  483 

Extent  of  liability  of,  for  baggage,  484 

Liability  of,  same  as  common  carrier,  485 

When  burden  of  proof  devolves  upon  him,  and  what  to  Ehow  ia  exonera- 
tion, 487 

Right  of  lien  when  stolen  property  is  confided  to  liim,  COG 
INSOLVENT  LAW, 

Contracts  intervening,  void,  177 
mSUR-ABLE  INTEREST, 

^\'hat  it  may  cover,  535 

Of  party  occupying  under  agreement  to  purchase,  5?5 


528  INDEX. 

INSURANCE, 

How  made  upon  a  trade  illegal  by  the  laws  of  another  country,  530 

Legality  of,  on  goods  contraband  of  war,  531 

Under  what  circumstances  made  relating  to  insurable  interest,  534 

Marine,  what  may  bo  on,  5G2 

What  the  consequences  of,  when  on  time,  562 

When  on  ship  for  voyage,  what  required,  563 

How  it  may  be  on  ship,  563 

Stock  companies  as  insurers,  609 

Mutual  Insurance  companies  as  insurers,  610,  611 

When  agent  in  possession  of  property,  boimd  to  make,  107 

When  agent  bound  to  make,  how  far  liable  in  case  of  omission,  108 
INSUEANCE,  MARINE, 

How  defined,  and  what  a  contract  of,  525 

Agreement  for,  hS%?-  enforced,  525 

Of  enemies'  property,  illegal,  526 

Through  what  agency  usually  procured,  526 

Of  voyage  from  abroad,  what  a  sufficient  description  of,  529 

How  affected  by  illegality  of  subject  matter  before  and  after  commence- 
ment of  voyage,  530 
INSURED, 

Obligations  of,  to  communicate  in  case  of  Life  Insurance,  618 
INSURER, 

What  he  undertakes  in  event  of  loss,  525 
INTEREST, 

Required  in  case  of  Life  Insurance,  615 

Quantity  of,  in  partnership,  how  regulated,  29 

Compound,  not  usury,  195 

WTien  must  be  reserved  to  constitute  usury,  200 
INTRINSIC  CIRCUMSTANCES, 

Rule  in  relation  to,  184 
INVENTORY  AND  SCHEDULES, 

Form  no  necessary  part  in  voluntary  assignments,  679 

JOINT  STOCK  COMPANIES, 

Under  what  principles  come,  21 

How  formed,  22 

To  whom  management  confided,  22 

To  what  members  entitled  to,  22 

When  hability  commences,  22 

What  will,  and  will  not,  render  members  of  provisional  committee  liable,  23 

Through  whom  power  to  contract  exercised,  2? 
JUDGMENT, 

Effect  of  on  contract,  242 
JUSTICE  PUBLIC, 

Contracts  impeding,  void,  177 


nn)EY.  529 

LEGISLATION, 

By  Congress  on  tlic  subject  of  sluppmg,  7 
LETTER, 

Negotiations  by,  when  completed,  15 1 
LETTER  TO  HIRE, 

What  his  duties  and  obligations,  471 

Of  labor  and  services,  wLat  degree  of  diligence  required,  and  what  the  mlo 
■where  skill  is  necessary,  477 

Liability  of,  where  work  fails  through  hia  own  neglect,  47^ 
UABILITIES, 

Of  the  common  carrier,  493 
UES, 

"What  it  is,  and  what  it  implies,  COO 

What  in  maritime  law,  what  in  equity,  690 

When  part  of  goods  are  delivered,  G91 

Particular,  or  special,  probable  origin  of,  094 

Common  law,  foundations  on  which  it  vests,  C95 

Right  of,  when  property  is  stolen,  and  confided  to  inn-keeper,  and  common 
carrier,  696 

Difference  in  such  cases  between  inn-keeper  and  common  carrier,  69G 

What  essential  to  it  as  to  debt  or  charge,  697 

What  may  suspend  the  right  of,  697 

When  right  may  revive,  697 

In  what  case  equity  will  create,  697 

Of  agent  or  factor,  what,  698 

What  is  covered  by  it,  698 

Agreement  of  the  parties  a  source  of,  and  what  will  establish  it,  699 

Not  destroyed  by  special  contract,  699 

Created  by  usage,  what  uistances  of,  700 

By  what  usage  created,  700  , 

Of  attorney,  solictor,  and  banker,  what,  700 

Cannot  be  claimed  for  unliquidated  damages,  701 

Character  of  debt  in  relation  to  which  it  may  exist,  702 

In  what  manner  lost,  703 

How  destroyed  by  change  of  character,  703 

When  necessary  for   protection,  toast  bo  distinctly  asserted,  or  is  doem«d 
waived,  704 

How  endangered  by  claiming  too  much,  704 

Under   what    circumstances   equitable  may,  or  may  not  bo,  superior   to 
judgment,  705 

Equitable,  for  purchase  money  on  land  sold,  and  when  and  how  same  is 
destroyed,  706 

How  destroyed  generally  by  same  means,  706 

Or  conditional  sale,  when  and  how  waived,  707 

34 


630  '  IKDEX. 

LIEN  (contlnned), 

How  easily  lost,  708 

Not  aflfectcd  by  set  oflf  on  each  side,  708 

Wlien  only  can  subsist,  709 

Destroyed  by  credit  existing  by  agreement  or  usage,  709 

Once  complete,  how  long  it  continues,  710 

How  far  one  may  go  without  losing  it,  710 

True  test  of  the  existence  of,  710 

How  far  deHvery  may  be  made,  and  right  of,  remain,  710 

May  exist  without  personal,  actual,  possession,  711 

Not  destroyed  by  voluntary  surrender  for  a  special  purpose,  711 
LIFE  INSURANCE, 

What  it  is,  and  objects  contemplated  in  entering  into  it,  614 

Interest  required  in,  615 

Policies,  conditions  often  inserted  in,  619 

Their  assignabihty,  620 

May  be  revived  by  accepting  premiums,  623 
LIGHTNING, 

r 

Losses  by,  when  insurer  liable  for,  597 
LIMITATIONS,  STATUTE  OF, 

Effect  and  period  of,  245,  246 

When  commences  running,  247 

How  long  continues  to  run,  248 

What  will  take  case  from  under,  249,  250 

Effect  of  part  payment  by  one  of  joint  and  several  debtors, on  the  others, 
251 
LIMITED  PARTNERSHIPS, 

What  they  consist  of,  23 

By  what  created,  23 

How  formed,  23 
LOAN, 

How  sometimes  concealed,  192  and  193 

^Vhat  must  be  for,  to  make  usury,  194 
LOAN  FOR  USE, 

How  defined,  452 

Not  a  contract  legally  enforceable,  452 

Under  whai  principle  comes,  and  what  degree  of  diligence  required,  453 
LOSS, 

What  the  value  in  case  of,  603 

Effect  of,  when  ascertained  by  agreement,  603 

Effect  of  insertion  of  sum  in  fire  poHcy,  604 

Difference  in  adjustment  between  fire  and  marine,  604 

Amount  of,  which  insured  is  entitled  to  receive,  if  he  has  only  qualified 
property  in  the  thing,  606 


INDEX.  631 


LOSS  (continued), 

Amount  of,  how  ascertained,  580 

Adjustment  of,  Tvhen  final  between  parties,  582 

Partial,  what  it  is,  when  total  may  become  so,  578 

How  sum  to  be  paid  arrived  at,  570 

How  when  goods  carried  to  place  of  destination,  580 
LOSS,  TOTAL, 

Its  different  kinds,  509 

WTiether  of  ship,  cargo,  or  voyage,  572 
LOST  BILL  OR  NOTE, 

"What  course  holder  to  pursue  in  case  of,  3G9 


MANDATARY, 

Only  possessory  title.  Rights  which  he  po=?c=?es,  445 

How  liable  as  to  diligence  and  negligence,  447 

Difference  between  and  depositary,  447 

Difference  in  liability  of,  how  arising,  448 

And  depositary,  how  liabilities  may  be  changed,  449 

Under  what  implied  obh'galion,  what  bound  to  do,  and  to  what  entitled, 
450 
iL^NDATE,  MANDATOR,  JLINDATARY, 

How  defined,  444 

AMiat  tlu"ee  things  necessaiy  to  create,  444 

What  its  essential  qualities,  444 
JL^NDATE  CONTRACT, 

Modes  of  dissolution  of,  451 
MANUFACTURER, 

Cannot  in  assignment  direct  the  manufacture  of  his  stock,  C78 
MARDTE  INSURiVNCE, 

How  defimed,  525 
MARITIME  LOANS, 

Bottomry  and  respondentia  bonds  under  what  circumstances  made,  412» 
l^IARRIAGE,' 

Who  may  enter  into,  734 

Wlio  may  not  enter  into,  734 

As  to  which  party  voidable,  734 

Degrees  of  relationship  within  which  prohibited,  735 

How  viewed  by  the  law,  and  what  necossary  to  it,  73G 

How  to  be  regarded  when  made  in  other  StJites,  and  ia  fraud  of  iLc  laWB  0< 
the  State  where  parties  reside,  737 

Settlements,  then  valid  and  enforceable,  751 

Contracts  in  restraint  of,  void,  1 77 

Brokerage  contract,  what  and  void,  177 


532  mDEX. 

MARRIAGE,  (continued), 

Disability  of,  15 
MASTERS  OF  SHIPS, 

When  liable  on  contract  for  repairs,  118 

May  bind  owners,  9 

Cannot  create  lien  in  their  favor,  702 
MEMORANDUM, 

What  it  is,  and  its  legal  effect,  542 

What  kind  of  destruction  will  subject  insurer  to  payment  On  memorandom 
articles,  543 

Effect  of,  when  pa'rt  of  articles  destroyed,  644 

In  writing,  required  by  Statute  of  Frauds,  what,  652 
MERCHANT, 

Duties  of,  imder  contract  of  affreightment,  418 

Vessels  common  carriers,  489 
MERGER, 

As  a  mode  of  extinguishing  guaranty,  384 
MISFEASANCE, 

Difference  between  and  nonfeasance,  446 

Will  render  party  liable,  446 
MISREPRESENTATION, 

Difference  between  fraudulent  and  not,  546 

What  must  relate  to,  547 

Promissory  what,  and  how  rendered  effectual,  547 
MISTAKE, 

How  preventing  contract  of  sale,  644 

And  ignorance,  how  differing,  644 

Of  law  and  of  fact,  644 

As  a  mode  of  extinguishing  guaranty,  388 
MONEY, 

When  recoverable  back  on  rescinding  contract,  219 

Paid  by  agent  for  principal,  how  long  liable  for,  118 

Paid  by  agent,  when  recoverable  back  by  principal,  141 
MONTH, 

Whether  calendar  or  lunar,  211,  337 
MORAL  OBLIGATION, 

Pre-existing,  sufficient  consideration,  162 
MORTGAGE, 

Points  in  which  it  differs  from  pledge,  456 
MORTGAGEE, 

Insuring  property,  what  his  rights  in  case  of  loss,  605 
MORTGAGOR, 

Insuring  property  and  assigning  to  mortgagee,  effect  of,  592 
MUTUAL  INSURANCE  COMPANIES, 

How  got  up  and  organized,  610,  611 


INDEX.  583 

NECESSARIES, 

What  they  are,  who  liable,  and  when,  72J 

For  the  wife,  when  husband  liable  for,  743 
NEGLECT, 

Ordinary,  gross,  slight,  what,  434 
NEGLECTS, 

Different  kinds  of,  in  bailment,  434 
NEGLIGENCE, 

In  the  plaintiff  prevents  his  recovery  against  defendant  for  an  Injtiry,  624 
NEGOTIAELE  PAPER, 

What  gives  it  mercantile  character,  12 

Should  be  in  firm  namo  to  bind  it,  42 

To  bind  firm  must  be  negotiated  on  its  behalf,  43 

When  pledged  cannot  be  sold,  4G1 

What  parties  primarily  and  secondarily  liable,  281 

What  business,  and  what  accommodation,  282 

What  its  requisites,  284,  285,  287,  288  .  , 

How  transferred,  and  with  what  effect,  290,  291 

Difference  in  effect  of  transfer,  292 

What  gives  it  this  quality,  293 

Payable  to  order,  who  must  indorse,  298 

Payable  to  trustee,  or  married  woman,  by  whom  indorsed,  302 

What  two  modes  of  indorsing  some,  303 

What  sufficient  indorsement  in  blank,  304 

When,  how,  and  what  effect  of  indorsement  in  full,  303 

Who  may  indorse  in  full,  and  for  what  purpose,  30G 

What  two  offices  indorsement  performs,  307 

What  contract  is  made  by  it,  and  with  whom,  307 

Difference  in  effect  of  indorsement  of,  before  and  after  due,  309 

Subject  to  what  defences,  &c.,  taken  after  due,  311 

Payable  on  demand,  when  due,  312 

Under  what  circumstances  subject  to  defences  when  taken  before  due,  313 

How  transferable  without  incurring  liability,  314 

Indorsement  of,  follows  nature  of  original  contract,  315 

Indorsement  of,  how  long  revocable,  316 

Effect  of,  when  transferred  on  prcvteus  debt,  317  , 

Under  what  circumstances  received  in  pajTnont,  317 

Indorsement  of,  has  same  consequences  ns  drawing,  319 

Indorsement  of,  what  evidence  and  effect  of,  320 

When  transferred  by  delivery,  what  obligation  created,  821 

WTien  it  must,  and  may,  and  may  not,  be  presented  for  nccoptanrc,  323 

When  to  be  presented  for  acceptance,  when  paynblo  oo  long  aAcr  sight  or 
demand,  324 

What  elements  enter  into  acceptance  of,  325 

What  drawee  must  bo  satisfied  of,  before  accepting,  82G 


534  INDEX. 

NEGOTIABLE  PAPER  (continned), 

Wlieri  promise  to  accept  equivalent  to  acceptance,  327 

■\\Tiat  different  acceptances  may  be  offered,  329 

"WTien  payable  at  particular  place,  duty  of  holder,  335 

WTien  pajTuent  of  demandable,  338 

Place  where  demand  of  pajTnent  to  be  made,  339 

■\^Tien  lost,  how  demand  of  pajTuent  made,  340 

When  necessary  to  be  protested,  350 

■\^Tiat  mcluded  under  term  protest  of,  352 

By  whom  notice  6f  dishonor  of  to  be  given,  355 

To  whom  notice  of  dishonor  of  given,  and  by  whom,  356 

"What  the  tune  and  manner  of  sei-vice  of  notice  of  dishonor  of,  357 

Manner  of  serving  notice  of  dishonor  of,  358 

When  prior  parties  to,  held  hable  without  notice  of  dishonor,  362 

What  enables  holder  to  look  to  all  parties  on,  3G3 

When  parties  to,  may  be  sued  before  bill  falls  due,  366 
,        When  bank  liable  for  not  protesting  same,  367 

When  lost,  what  course  holder  to  pursue,  369 

In  case  of  loss,  what  holder's  position,  difficulties,  and  rights,  369 
NOMINAL  PARTNER, 

What,  24: 
NONFEASANCE, 

Will  not  render  party  liable,  446 
NON-PERFORI\IANCE  OF  CONTRACT, 

What  excuses,  212,  213 
NOTARIAL  CERTIFICATE, 

■What  it  must  contain,  352 
NOTARY  PUBLIC, 

When  services  first  necessary,  and  what  constitutes  his  duty,  350 

What  to  do  on  receiving  bill,  351 

Must  perform  his  service  personally,  352 

Who  the  agent  of,  and  what  to  do  after  the  demand  and  refusal,  353 
NOTES, 

Exchange  of,  how  affecting  usury,  206 
NOTICE, 

By  whom  to  be  given,  355 

What  the  essentials  of,  354 
NOTICE  GENERAL, 

When,  and  how,  carrier  can  limit  his  liability  by,  502 

Against  what  it  does  not  protect  carrier,  505 
NOTICE  OF  DEMAND  AND  REFUSAL, 

What  the  principal  points,  353 
NOTICE  OF  DISHONOR, 

Different  manners  of  servmg,  358,  359 

What  necessary  as  to  time  of  giving,  357 


INDEX.  535 

NOTICE  OF  DISHONOR  (continued), 

"When  prior  parties  held  liable  without  receiving,  3G2 
NOTICE  OF  DISSOLUTION  OF  PARTNERSUIP, 

■ftTien  necessaiy,  and  for  what  purpose,  51 

WTiat  single  or  dormant  partner  must  do,  62 

When  not  necessary,  53 

Not  in  case  of  partner's  death,  54 

Two  different  modes  of  giving,  58 
NOTICE  TO  AGENT, 

TVTien  it  affects  the  principal,  135 

Sufficiency  of,  135 

OBLIGATIONS, 

To  make  mutual  disclosures,  what,  646 
OWNER  OF  GOODS, 

How  bound  to  deal  with  the  carrier,  503  • 

PARENT  AND  CHILD, 

What  the  obligations  of  the  former,  and  his  rights  as  to  his  minor  children, 
754 

Power  of  former  to  discipline  latter,  and  to  whom  courts  giro  custody  d 
latter,  755 
PARTICLTAR  OR  SPECIAL  LIEN, 

A\Tiat,  693 
PARTIES  INSURERS, 

Who  they  are,  526 

To  bill  of  exchange,  271,  272,  273  , 

Who  primarily  and  secondarily  liable  on  negotiable  paper,  281 
PARTNER, 

Of  what  he  has  power  of  disposition,  26 

Effect  of  holding  one's  self  out  as  such,  20 

Borrowmg  money,  when  an  individual,  and  when  a  partnership  debt,  36 

Selling  goods  gives  title,  though  proceeds  misapplied,  35 

Cannot  apply  partnership  property  on  his  own  account,  35 

Powers  of,  in  all  co-partnership  matters,  36 

Power  of,  to  ruin  through  negotiable  paper,  4 1 

Cannot,  after  dissolution  of  firm,  revive  debt  against  it,  45 

Dissolving  or  retiring,  how  to  give  notice,  55 
PARTNERS, 

Right  of  one,  to  make  a  voluntary  assignment,  667 

Their  different  kinds,  24 

WTiat  they  owe  towards  each  other,  30 

Cannot  charge  partnership  for  services,  30 

When  they  can  brmg  action  at  law  against  each  other,  32 

Remedies  against  each  other  where  enforceable,  32 

Rights  of,  on  dissolution  of  partnership,  48 


536  INDEX. 

PARTNERSHIP, 

Wliat  it  results  from,  IG 
What  constitutes  its  important  feature,  17 
^Vbat  stipulation,  as  to  profits,  -will  create,  18 
What  necessary  to  create,  as  to  assent,  19 
Different  modes  by  which  formed,  20 
For  what  formed,  21 
Limited,  what  consist  of,  22 

Limited,  by  what  created,  and  how  formed,  22  ' 

Fund,  relations  of  partners  to,  2G 
When  it  embraces  real  estate,  27 
Stock.     Limitation  of,  when  embracing  profits  only,  28 
Agreement,  what  it  generally  specifies,  31  * 

What  it  is,  with  what  clothed,  33 
Power  of  partner  to  bind,  37 
Mode  of  binding  by  partner,  38 
Limitation  as  to  power  of  partner  to  bind,  39 
Bound  only  when  third  person  acts  in  good  faith,  44 
Effects,  how  applied  by  equity  inpayment  of  debts,  46 
Modes  of  dissolution  of,  and  consequences,  47,  48 
PART  OWNERS  OF  SHIP, 
Are  agents  for  each  other,  9 

Power  over  vessel  and  when  hable  for  each  others'  torts  and  wrongs,  9 
PART  PAYMENT, 

Effect  of,  on  statute  of  limitations,  250 
Effect  of,  in  case  of  joint  debt,  251 
#ARTY, 

Entitled  to  question  assignment,  686 
Paying  supra  protest,  to  what  rights  entitled,  368 
Paying  bill  or  note,  what  should  do,  347 
Difference  in  receiving  note  before  or  after  due,  309 
Receives  it  clothed  with  advantages  of  party  giving  it,  310 
Subject  to  what  defences  and  equities  receives  it  after  due,  311 
PAYEE, 

Who  and  when  must  indorse,  298 
In  case  of  death  of,  who  indorses,  299 
When  a  partnership  indorses,  and  how,  300 
When  of  several  not  partners,  who  mdorses,  309 
PAYMENT, 

Persons  to  whom  it  can  be  made,  222 
Of  part,  in  satisfaction  of  contract,  223 
Under  what  circumstances  presumed,  224 
(        Modes  in  which  it  may  be  made,  224 
Effect  of  receipt  given  on,  227 
Demand  of.     Elements  composing,  336 


INDEX.  537 

PAYMENT  (continued), 

Time  for  making,  and  how  compnted,  337 

How  made  in  case  of  lost  bill,  840 

'\\Tien  notice  of  unnecessary  to  drawer,  3i  I 

Of  whom  made,  343 

A\Tiat  acceptor  or  maker  should  be  satiified  of,  before  makijig,  IW-4 

In  what  made,  and  when  check  evidcuco  of,  345 

Made  of  bill  or  note,  when  recoverable  back,  348 

By  agent  discharges  principal,  13G 

How  affected  if  agent  pcrmitt».d  to  deal  as  principal,  137 

Principles  that  govern  application  of,  225 

Effect  of,  where  several  accounts  treated  aa  one,  220 

As  a  mode  of  extinguishing  guaranty,  381 
PENALTY, 

"When  viewed  as  such,  and  not  as  liquidated  damages,  259 
PERFORMANCE  OF  CONTIUCT, 

"V\Tio  the  party  to,  208 

'What  the  manner  of,  209 

How  to  be  done,  210 

Rule  of,  as  to  time,  211 

"WTien  condition  precedent  and  covenant  consideration,  21-t 
PERIL, 

Must  bo  proximate  cause  of  loss,  55G 
PERILS  OF  THE  SEA, 

What  do  and  do  not  include,  555 

Insured  against,  what  and  where  found,  554 
PERSON, 

Competent  to  demand  pajTncnt  and  what  must  have,  343 
PERSONAL  LIABILITY, 

Under  what  circumstances  agent  may  assume,  IIG 

"WTien  incurred  by  agent,  117 
PERS0N.4X   PROPERTY, 

Characteristics  of,  as  distinguished  from  real,  1 

Inalienable,  4 
PLACE  OF  DELHTRY, 

In  contract  of  sale  and  paj-ment  of  debt,  whore,  C58 

Wliero  demand  of  payment  to  bo  mode,  339 
PLEDGE, 

What  it  is,  what  property  may  bo  plodg.- 1,  what  c!«««ntial  to  it,  455 

In  what  respects  differing  from  jnortgngo,  4.'>(J 

Under  what  principle  it  comes,  458 

Wiut  is  carried  witli  it,  andVhal  its  security  dcjKiwU  upon,  45D 

Wiat  debt  or  debts  only  it  will  cover,  400 

Wlicn  consisting  of  negotiable  pajHsr  cannot  b«  lold  at  publie  or  prirau 
sale.  4G1 


638  INDEX. 

PLEDGE  (continued), 

When  consisting  of  several  things,  each  liable  for  whole,  402 

By  what  means  contract  of  extinguished,  4G8 
PLEDGEE, 

What  bound  to,  and  answerable  for,  458 

"What  his  interest  or  property  in  pledge,  460 

PJghts  of,  as  against  pledge  and  debtor,  461 

Cannot  appropriate  or  purchase  pledge,  463 

Under  what  circumstances  may  compel  sale,  463 

Under  what  circumstances  may  use  pledge,  464 
PLEDGOR, 

"When  liable  for  injury  or  loss  of  pledge,  468 

Eight  to  redeem  pledge,  466 

Right  in  pledge  when  sold  under  execution,  467 
PLEDGOR  AND  PLEDGEE, 

Extent  of  interest  or  property  of  each  in  pledge,  457 
POLICIES, 

On  outward  and  home  voyage,  564 
POLICIES  AND  PREMIUM  NOTES, 

Whether  constituting  the  same  or  different  contracts,  612 
POLICY  OF  INSURANCE, 

What  its  design,  538 
POLICY  WAGER, 

How  regarded  in  England  and  in  this  country,  538 

Open  and  valued  what,  539 

When  valued  what  questions  are  open,  539 

What  it  should  contain  as  to  names  of  parties,  540 

"When  on  a  ship,  what  necessary,  541 

How  long  it  protects  vessel,  506 

For  fire  insurance,  what  made  part  of,  587 
POSSESSION  OF  PERSONAL  PROPERTY, 

What  prima  facie  evidence  of,  684 

"Whether  prima  facie  or  conclusive  evidence  of  fraud,  685 
POWER, 

Of  one  partner  to  bind  firm,  and  where  he  cannot,  45    i 

Of  corporations  limited  in  making  contracts,  67 
POWERS  OF  CORPORATIONS, 

Enumerated,  68 

How  confined,  62 
PRELIMINARY  PROOFS, 

In  insurance  how  waived,  608 
PREMIUM  NOTES, 

How  held  and  enforceable  against  makers  by  the  company,  613 

la  what  cases  return  may  be  enforced,  583 


INDEX. 


639 


PEICE, 

What  it  Is,  and  essential  to  what,  C29 

Inadequacy  of,  what  eflfect  as  to  enforcement  of  contract,  C30 
^Mien  not  paid  down,  effect  of,  03 1 
PRIiL^GE, 

■\Vhat  it  is,  419 
PRINCIPAL, 

When  may  become  agent  for  his  agent,  110 

When  Uable  for  negligence  and  unskihulness  of  agent,  12G 

Not  liable  for  acts  of  sub-agents,  127 

Not  for  wilful  act  of  agent,  128 

When  liable  for  a  wrong  done  by  agent,  129 

Liability  of,  for  frauds,  torts,  &c.,  committed  by  agents,  129 

His  knowledge,  that  of  the  agent,  130 

Not  Uable  for  injuries  done  one  agent  through  carelessness  of  another,  131 

Not  criminally  liable  for  acts  of  agent,  132 

When  chargeable  with  declarations  of  agent,  134 

■WTien  affected  by  notice  to  agent,  135 

LiabiHty  for  purchases  made  by  agent,  136 

How  affected  by  acts  of  agent,  139 

WTiea  may  recover  back  money  paid  by  agent,  141 

Giving  time  to,  as  a  mode  of  extinguishing  guaranty,  333 

To  be  repaid  to  constitute  usiu-j',  198 
PPvOFITS, 

Commimity  of,  essential  to  partnership,  1 7 

Participation  in,  what  qualification  neccssarj',  18 

Partnership  in,  what  effect  it  has  on  partnership  stock,  23 

Under  what  circumstances  insurable,  535 

Loss  of,  what  recoverable  under  damages,  2G5 
PROmSE, 

On  each  side  must  be  concurrent  and  obligatory,  147 

As  consideration  for  a  promise,  IGl 

Not  enforceable  founded  upon  no  consideration,  104 

Express,  when  supported  by  executed  considcratimi,  103 

What  must  be  to  take  case  out  of  Statute  of  Umitatjou5,  219 

WTien  contained  in  fire  policy  may  amount  to  a  wurantj-,  690 

"Wlien  to  accept  equivalent  to  acceptance,  327 
PKOJILSSORY  NOTE, 

Form  of,  270 

Definition  of,  274 

When  it  assimilates  to  bill  of  exchange,  275 

In  what  analogy  consists  between  it  nnd  bill,  270 
PROPERTY, 

In  thing  deposited  ncccssaiy  to  depositor  and  depoMtary,  439 


640  INDEX. 

PROPOSITION, 

Its  agency  in  the  formation  of  contract,  145 

When  verbal  when  to  he  accepted,  149 
PROTEST, 

When  necessary,  350 

"What  is  included  under  the  term,  352 
PROVISIONS, 

What  prescribing  proceedings  in  case  of  loss,  607 
PUBLIC  POLICY, 

"What  contracts  void  as  against,  177 

Enemy,  who  it  is,  499 

Common  carrier  not  liable  to  loss  by  act  of,  495 
PURCHASES, 

Made  by  agent,  how  affecting  principal,  136 

QUALIFIED  ACCEPTANCES  OF  NEGOTIABLE  PAPER, 

What  parties  they  affect,  330 
QUESTIONS, 

To  which  answers  are  required  in  applications  for  life  insurance,  616 

RAILROAD  COMPANY, 

When  liable  for  servants  refusing  to  work  on  road,  498 

Liable  upon  failure  through  wilful  act  of  agent,  498 
REAL, 

Ostensible  partner,  what,  24 

Estate,  when  it  becomes  partnership  effects,  27 
RE-ASSURANCE, 

What,  and  what  insurer  to  prove,  536 
RECEIPT, 

Effect  of,  how  construed,  227 

When  pledged  on  discount  of  bill  to  be  accepted,  hinds  property,  331 
RECOUPMENT, 

What  it  is,  and  principles  settled  in  it,  255 
REDEMPTION, 

Right  of  in  pledge,  inalienable,  466 
REFUSAL  QUESTION, 

^Vhat  it  is,  and  how  probably  settled,  150 
REGISTERING, 

When  done,  effect  of,  and  what  necessary  in  case  of  change  of  owners,  6 
RELEASE, 

Different  modes  of,  230 

When  settlement  between  creditors  and  debtor  good  without,  231,  282 

Before  and  after  breach  of  sealed  executory  contract,  233 

AVhat  necessary  and  equivalent  to,  234 


INDEX.  541 

RELEASE  (continued), 

Upon  what  operates,  235 

By  one  of  several  joint  creditors,  236 

To  joint  debtors,  237 

"When  hy  operation  of  law,  238,  239 

As  a  mode  of  extinguishing  guaranty,  383 
REPRESENTATION, 

WTiere  found,  what  relates  to,  what,  546 

What  effect  when  fraudulent  and  not  fraudulent,  546 

What  effect  of,  to  first  insurer,  548 

VTha.t  is  matter  of,  549 

When  it  is,  and  is  not,  made  part  of  fire-insurance  policy,  688 

In  whose  judgment  material,  599 

False  and  fraudulent,  how  affecting  contract,  182 
REQUISITES, 

Of  negotiable  paper,  what,  284 
RESCETO  CONTRACT, 

When  party  may  and  may  Jot,  215,  216 

Who  may  do  it,  218 

When  party  may  do  it  and  recover  back  money,  219 

Test  as  to  right  to,  221 
RESCESTDING  CONTRACT, 

How  if  at  all,  217 
RIGHTS  OF  THE  CARRIER, 

What  they  are,  512 

Of  corporations,  shaped  from  contract,  57 
RISK  IN  LH^E  POLICIES, 

WTien  commencing  from,  and  how  long  continues,  622 
RULES  ANT)  REGULATIONS, 

May  be  prescribed  by  passenger  carriers,  522 

Relating  to  by-laws,  63 


SALE, 

Of  property  as  distinguished  from  bailment,  432 
Or  exchange,  what  it  is,  624 
Of  goods  not  in  possession  of  vendor,  effect  of,  627 
Contract  of,  when  entire  and  when  severable,  632 
Particular  species  of,  severable,  633 
When  executory,  634 
WTien  article  to  be  manufacturctl,  635 
How  vendee  may  entitle  himself  to  title,  636 

When  conditional,  and  effect  of,  and  on  trial,  what,  and  what  righta,  and 
duties,  of  vendee,  637 


542  itTOEx. 

SALE  (continued), 

Implied  conditions  of,  638 

Conditioned  on  payment  of  price,  639 

Conditional,  when  implied  waiver  of,  640 

Limit  of  communication  of  superior  knowledge,  647  ' 

Contract  of,  what  mutual  disclosures  of  facts  essential  to,  646 
SALES  BY  AUCTION, 

How  affected  by  by-bidders  or  puffers,  186 

How  rendered  void  by  agreements  not  to  bid  at,  186 
SALVAGE, 

What  expressed  by  this  term,  and  what  applied  to,  426 

Amount  of,  how  ascertained,  what  principles  governed  by,  what  usual  rat* 
of,  427 

What  expressed  by  the  term,  and  what  applied  to,  426 
SALVOR, 

Who  he  is,  who  entitled  to  become  such,  428 

Out  of  what  to  receive  compensation,  426 
SAMPLE, 

Sale  by,  when  amounts  to  warranty,  665 
SATISFACTION, 

Quahty  of,  229 
SEAMEN'S  WAGES, 

Not  insurable,  532 
SEAWORTHINESS, 

What  embraced  in,  warranty  of,  and  different  kindi?  of,  651 
SECURITIES, 

How  affected  by  usury,  201 

Originally  valid  cannot  subsequently  be  affected  by  usury,  205 
SET-OFF, 

On  each  side,  wiU  not  destroy  lien,  708 

How  affected  by  dealings  between  principal  and  agent,  138 

What  it  is,  252 

What  a  creature  of,  and  what  necessary  to  constitute,  253 

What  the  debts  need  not,  and  what  they  must,  amount  to,  254 
SHIP, 

Who  owner  of,  and  what  the  test  of  ownership,  409 

Owners  of,  duties  relative  to  voyage,  407 

Under  what  implied  warranty,  and  what  liable  for,  408 

Sale  of,  how  perfected  when  abroad,  8 

How  considered  when  belonging  to  partnership,  9 

In  what  manner  title  acquired  to,  5 
SHIPS, 

How  Americanized,  and  who  owner  must  be,  6 
SIGNATURE  OF  PARTY  ON  BACK  OF  NOTE, 

When  not  payable  to  his  order,  what  liability  created  by,  37S 


INDEX.  543 

SILENCE, 

When  it  Is,  and  is  not,  equivalent  to  misrepresentation,  184 
STATUTE, 

How  may  make  void  a  contract,  190 
STATUTE  OF  FRAUDS, 

"What,  and  what  included  under,  170 

What  the  tests  of  contracts  commg  within,  1?1,  173 

Classification  of  cases  in  reference  to,  375 

Provisions  of  English  statute,  G-t8 

What  contracts  within,  and  what  not,  649 

Kind  of  delivery  required  by,  650 

What  writing  must  state,  17'4 
STATUTE  OF  LIMITATIONS. 

Effect  and  period  of,  245,  246 

"ftTien  commences  running,  247 

How  long  continues  to  run,  248 

What  will  take  case  out  of,  249,  250 
STEAMBOAT, 

When  common  carrier,  and  when  not,  489 
STEP-FATHER,  ^ 

What  his  relations  and  rights  as  to  children  of  wife  by  former  husband,  75G 
STOCK, 

Insurance  companies,  what,  609 
STOCKS, 

Of  incorporated  companies,  how  pledged,  455 
STOCKHOLDER  OF  STOCK  CORPORATION, 

Not  disfranchisable,  64 
STOPPAGE  IN  TRANSITU, 

Wliat  it  is,  on  what  conditions  depends,  712 

Whence  derived,  713 

Who  the  parties,  to  what  extends,  714 

What  its  necessary  condition,  715 

How  destroyed,  716 

Effect  of  constructive  delivery,  717 

When  goods  in  transit,  718 

When  transit  at  an  end,  719 

When  goods  in  constructive  possession,  720 

Insolvency  of  vender  and  evidence  of  it,  721 

What  acts  of  vendee  destroy  right,  722 

Effect  of  delivery  order,  723 

How  destroyed  by  assigning  bill  of  lading,  734 

How  right  to  be  exercised,  725 

To  whom  notice  to  bo  given,  726 

Effect  of  exercise  of  right,  727 


644  INDEX. 

SUBJECT  MATTER  ES^SURED, 

Where  to  appear,  527 

Effect  and  necessity  of  phrase  "  lost  or  not  lost,"  528 
SUBROGATION 

What,  and  how  far,  surety  entitled  to,  395 
SUPPRESSION  OF  JMATERIAL  FACT, 

How  affecting  contract,  183 
SUPRA-PROTEST, 

"When  done,  how,  and  what  effect  of,  332 

Party  paying  under,  to  what  rights  entitled,  368 
SURETIES, 

Relations  between,  and  how  shown,  402 

Rights  of,  as  against  each  other,  397,  398,  399,  400,  401,  402 
SURETY, 

Rights  of,  against  the  principal,  396 

Not  liable  till  default  of  principal,  390 

Rights  of,  against  creditor,  393,  394,  395 

When  only  can  resort  to  surety  for  contribution,  400 

What  he  cannot  recover  against  another,  401 
SURGICAL  OPERATIONS, 

What  the  rule  of  liability  in,  477 

TENDER, 

Defence  of,  what  it  requires  to  be  good,  244 

Effect  of,  made  by  or  to  agent,  94 
TEST, 

First  one  as  to  whether  contract  is  collateral  or  original,  171 

Second  one  as  to  same  thing,  173 

As  to  right  to  rescind  contract,  221 
THEFT, 

As  peril  insured  against,  what  it  means,  560 
THING  TO  BE  HIRED, 

Its  nature,  quality,  essentials,  470 
THING  TO  BE  SOLD, 

What  to  have  at  time  of  sale,  625 
THINGS, 

Which  may  be  subject  of  sale,  628 

In  possession  and  in  action,  what  in  each,  2 
TIME, 

At  which  delivery  to  be  made  by  carrier,  506 

At  which  indorsement  is  made,  294 

What  the  essentials  of,  in  giving  notice  of  dishonor,  357 

Of  performing  contract,  what,  211 
TITLE, 

How  acquired  and  transferred  in  shipping,  5 


INDEX.  545 

TITLE  (continued), 

To  personal  property,  how  transferred  by  operation  of  law,  G:>4 

Partial  failure  of,  effect  as  to  rescinding  contract,  Cl'G 

To  things  sold,  wLeu  implied  warrantee  of,  Co'J 
TRADE, 

Contracts  in  general,  and  partial  restraint  of,  177 
TEADE  MARKS, 

"Wbat  analogous  to,  11 

How  right  to  acquired,  what  name  or  marks,  whoa  merehant  not  to  ojc, 
and  what  the  remedy,  1 1 
TRADER, 

"Who  he  is,  13 
TRANSFER  OF  NEGOTIABLE  PAPER, 

How  made  without  incurring  liability,  314 

By  delivering  what  obligations  it  creates,  321 

UNREGISTERED  SHIP, 

Its  disabilities,  G 
USAGE, 

What  necessary  to  create  lien,  700 
USAGE  OF  CARRIER, 

To  receive  goods  at  certain  places,  sufficient,  494 
USAGE  OF  TRADE, 

How  affects  express  and  implied  contracts,  15G 
USURY, 

^Vhat,  and  what  inquiries  arise  under  it,  191 

What  the  first  essential  to,  102 

WTiat  loan  must  be  for,  to  make,  1 94 

Not  by  taking  compound  interest,  195 

Not  by  charge  for  expenses,  196 

Not  by  taking  interest  in  advance,  197 

^Tiat  essential  as  to  repayment  of  principal,  19S 

Effect  where  party  can  discharge  liimsclf  from  pa}-ing  any  inMreu,  190 

When  interest  to  be  reserved  to  constitute,  200 

How  affecting  remote  securities,  201 

How  affects  new  agreement  in  consideration  of  forboaraixw,  202 

How  may  be  rescn-cd,  203 

"Who  only  can  set  it  up,  204 

When  note  originally  valid  cannot  bo  subsequently  allbctod  by,  805 

How  affected  by  exchange  of  notes,  20G 

VENDEE, 

May  intercept  goods  in  transit,  and  destroy  right  of  atoftpag*  la  te«c 

situ,  722 

35 


546  INDEX. 

VESSEL, 

VTiat  in  a  legal  sense  is  stranding  of,  545 
When  presumed  to  have  perished  at  sea,  657 

WAIVER  OF  PROTEST, 

How  construed,  352 

Of  right  of  lien,  how  done,  704 

Of  conditional  sale,  when  implied,  640 

la  case  of  insufficiency  of  preliminary  proofs  in  insurance,  608 
WARRANTY,  RELATING  TO  INSURANCE, 

Wiat,  how  introduced,  how  differs  from  representation,  650 

Implied,  what  the  most  important,  551 

Implied  of  documentation,  553 

Its  different  kinds,  impUed  of  title,  659 

Not  implied  as  to  quality,  660 
WARRANTY  EXPRESS, 

What  it  may  consist  of,  and  the  rule  of  construction,  662 

General   object  of  it,  when  to  be  made,  and   what  defects  are   covered 
by,  663 

What  may  amount  to,  664 

When  sale  by  sample  amounts  to,  665 
WIFE, 

To  whom  her  choses  in  possession  go  upon  marriage,,  739 

To  whom  her  choses  in  action  go  in  event  of  marriage,  740 

Ability  of,  to  contract  and  acquire  property  and  rights,  744 

Declarations  of,  when  affecting  husband,  752 

Liability  of,  for  her  separate  debts  how  affected  by  marriage,  747 

How  to  contract  with  her  husband,  and  to  convey  interest  in  real  es- 
tate, 749 

How  to  dispose  of  property  by  will,  750 

WTien  settlements  in  favor  of,  enforcable,  751 

Power   of   disposition   over  her   separate   property,   by  what  means  re- 
strained, 748 

Necessaries,  when  husband  is,  and  is  not,  liable  for,  743 

Relief  of,  in  courts  of  equity,  745 

Property,  when  court  of  equity  wUl  secure  for  her  benefit,  741 

Power  of^  over  her  separate  property,  obligations  to  others,  and  how  en- 
forced, 746 

Eights  of,  by  legislation  ia  the  State  of  New  York,  753 


INDEX 

TO  PRACTICAL   llEMARKS   ^VND  FOKMS, 

With  Reference  to  the  Page. 


tkan 

ARBITRATION,  form  of  Submission  to 473 

ASSIGNIIENT,  of  Judgment,  form  of 4C0 

OfMortgage, 470 

Voluntary,  by  Insolvent  Debtor,  form  of 470 

AWARD  OF  ARBITRATORS,  form  of 473 

BILL  OF  EXCHANGE,  foreign 473 

Inland 474 

BILL  OF  LADING,  form  of 49G 

BILL  OF  SALE 481 

BOND,  Bottomry 479 

Common  Money            .........  478 

Of  Indemnity 479 

CERTIFICATE,  of  Acknowledgment  of  Execution  of  Deed,  or  Mortg«g«  49(5 

CHATTEL  MORTGAGE,  form  of       .......  4&4 

Schedule  referred  to  in      .         .         .         .  49C 

CHECK  ON  A  BANIv,  form  of .474 

CODICIL  TO  A\TLL,  how  executed  and  regarded     ...  4C8 

Form  of CO6 

CONTRACT,  general  form  of,  with  mutnol  coTcnant^  4t"3 

For  sale  of  shares  of  Stock 4.*3 

For  s-ale  of  Land 481 

DEED,  -what  essential  to  as  to  Bcaling  and  delivery  4GS 

Different  kinds  of 4CS 

Common  Warranty,  what  ncccssoiy  befors  action  apminrt  Grantor  4'*>l 

What  amount  of  interest  and  estate  conveys.  <Ct 


648 


INDEX. 


DEED  (continued), 

"VVlien  not  available  to  Grantee 

As  to  necessity  of  inserting  term  "  Heirs  " 

Consideration  for,  and  ^ow  premises  described 

Of  Compromise  with  Creditors,  form  of 

Quitclaim,  witli  covenants  against  Grantor's  Acts 

With  Covenants  of  Warranty,  form  of    , 

With  full  Covenants  of  Warranty,  form  of 

Of  Trust,  form  of 

Of  a  Water  course,  form  of        ...         . 
Confirmation  of,  by  indorsement  by  Infant  on  coming  of  age 
Or  Mortgage,  Certificate  of  acknowledgment  of  execution  of 

DISSOLUTION,  form  of,  to  be  indorsed  on  Partnership  Articles 

INSURANCE,  form  of  Marine  Policy  on  Ship  and  Goods 


JUDGMENT  NOTE,  form  of 


LEASE,  form  of      ,         .         . 
LETTER  OF  CREDIT,  form  of 


MARINE  POLICY  OF  INSURANCE  on  Ship  and  Goods 

MORTGAGE,  how  regarded 

What  the  interest  in,  and  to  whom  goes  on  death  of  Mortgagee 

When  need  not  be  executed  by  wife  of  Mortgagor 

Rule  in  equity  where  part  of  mortgaged  premises  have  been  sold 

How  executed  and  recorded 

Assignment  of.  Effect  of  recording  or  not  recording 
Remedies  in  case  of  non-payment 
MORTGAGE  WITH  PO^VER  OF  SALE,  form  of    . 
With  covenant  to  insure,  form  of            ... 
Chattel,  form  of 


NOTE,  Negotiable  by  indorsement,  form  of 
Negotiable  without  indorsement,  form  of    . 
Not  Negotiable,  form  of         ....         . 

Payable  at  Bank,  form  of  .... 

Judgment,  foi-m  of        .....         . 

Or  bill,  Protest  of  for  non-payment     . 

NOTICE  TO  DRAWER  OR  INDORSER,  form  of 

Specified  in  Partnership  Articles,  form  of  . 


PARTNERSHIP  ARTICLES,  form  of 

POWER  OF  ATTORNEY,  to  CoUect  Debts,  form  of 

To  Sell  and  Convey  Real  Estate     . 

To  Transfer  Stock,  form  of        ...        . 


PAGE 

464 
464 
464 
482 
485 
486 
487 
489 
491 
492 
496 
501 

497 

475 

477 
477 

497 
465 
465 
465 
465 
465 
466 
466 
492 
493 
494 

474 
475 

475 
475 
475 
476 
477 
500 

498 
502 
502 
602 


INDEX. 


510 


PO^\TER  OF  ATTORNEY  (continued), 

To  vote  at  Election  of  Directors,  or  a  Proxy 
Substitution  to  be  entered  on  Power 
Revocation  of,  form  of  .... 

PROTEST,  of  Is  ote  or  Bill  for  non-payment,  form  of 


RELEASE,  general  form  of  ....       V       . 

Special  form  of  ........ 

Of  part  of  IMortgaged  Premises,  form  of  .  .  . 
RENEWAL,  form  of,  for  indorsement  on  partnership  articles 
REVOCATION,  form  of,  of  Power  of  Attorney    . 

SLTJfflSSION  TO  ARBITRATION,  form  of    . 
SUBSTITUTION,  to  be  indorsed  on  Power  of  Attorney,  form  of 


TRUST  DEED,  form  of 


WILL,  what  it  is 

Who  may  mako 

Of  Personal  Property,  who  may  mako 
How  to  bo  executed  and  attested         ..... 
Witnesses  to,  what  mimber  required  in  different  States 
Witnesses  to,  must  write  their  names  and  places  of  residence 
Codicil  to,  what,  bow  executed,  and  bow  regarded 
And  Codicil,  construction  given  to,  and  manner  of  execution  of 
Of  Real  Estate,  according  to  what  law  enforced 
Of  Personal  Estate,  according  to  what  law  enforced 
Term  "  Heirs  "  need  not  be  inserted  in  ... 

Subject  to  what  changes        ....•• 
How  property  goes  not  disposed  of  by 

No  technical  words  necessary  to  the  making  of       .         .         • 
How  necessary  to  be  worded  to  prevent  wife  from  taking  under 
claiming  Dower      .....••• 

Of  Real  and  Personal  Estate,  form  of 

Codicil  to,  form  of 


rAGE 

C03 
503 
o03 
47G 


.^01 

r.ot 
r,o  I 

5<il 
5t»3 

472 
r,03 

4GG 
406,  4G7 
4C7 
4G7 
467 
4CS 
4G8 
4GS 
4G8 
468 
4  08,  460 
409 
•109 
409 


and 


409 
fi05 
606 


TOE  EKD. 


■vv; 


# 


D.  APPLETON  i  CO.'S  PUBUCATIOXa 


Report  of  the  Council   of  Ily- 

giene  and  Public  Ilealth  of  the  Citizens'  Association  of  New 
York  upon  the  Sanitary  Condition  of  the  City.  l^ibliahcJ 
with  an  introductory  statement,  by  order  of  the  Coimcil  of 
the  Citizens'  Association.  Largo  8vo,  SCO  pp.  Illustrated 
with  numerous  maps,  plans,  and  sketches.    Cloth.    Price,  f5. 

"Is  devoted  to  a  minute  account  of  the  caosM  of  dU«ase, death,  »nd  ral»- 
ery,  and  of  the  sanitary  reforDLS  needful  to  arrest  tbote  trlit."—Scui  i't/rt  E^ 
press. 

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record  of  the  state  of  things  now  existing.  The  luTcstlgutlon*  bare  t>ccn  moM 
thorough." — yew  Yoik  rajur. 

"  The  result  is  no  mere  collection  of  statistics,  tiul  Intcrertlng,  deeply  Inter- 
esting rehearsals  of  facta."— ^«!0  York  Commtrcial  Ailttrtitr. 

Social  Statics ;    or,  The  Condi- 

tions  Essential  to  Human  Ilappiness  Specified,  and  the  first  of 
them  developed.  By  Eerdert  SrE.NCEB.  Aullior  of  "  Illua- 
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tic,"  "  Education,"  "  Principles  of  Biolop},"  "  Principle  of 
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portrait.     Large  12 mo,  518  pp.    Cloth.     Price,  ? 2. 

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discussing  abstract  questions  in  a  way  to  Interest  every  claM  of  reaUcn." — 
Chicago  Christian  limes. 

The  Correlation  and  Conserva- 

tion  of  Forces.  A  Series  of  Expositions,  by  Prof.  Grotk,  Prof. 
IIelmholtz,  Dr.  Mayer,  Dr.  Farap.vy,  Prof.  Lictio,  and  Dr. 
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"  Will  be  read  with  profound  attention  by  Ihoughlful  men."— -V.  I".  Ot>»trnr. 


D.  APPLETON  k  CO.'S  PUBLICATIONS. 


Cyclopsedia  of  Commercial  and 

Business  Anecdotes,  comprising  Interesting  Reminiscences  and 
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nearly  three  thousand  illustrative  Anecdotes  and  Incidents, 
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General  Business  Pursuits.  By  Frazer  Kirkland.  Embel- 
lished with  Portraits  and  Illustrative  Cuts.  Large  8vo.  2 
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Essays:    Moral,    Political,   and 

^Esthetic.  By  Herbert  Spencer,  author  of  "  Illustrations  of 
Universal  Progress,"  "First  Principles  of  Philosophy," 
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Apologia  Pro  Yita  Sua.    Being 

a  Reply  to  the  Pamphlet  entitled,  "  What,  then,  does  Dr.  New- 
man Mean  ?  "  "  Commit  thy  way  to  the  Lord,  and  trust  m 
Him,  and  He  will  do  it.  And  He  will  bring  forth  thy  justice 
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"  It  is  a  work  which  should  be  read  by  all  who  wish  to  keep  informed  in  the 
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